10-Q

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 June 30, 2022

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 Class	Trading Symbol	Name of Each Exchange on Which Registered
Common stock, no par value	LBC	The Nasdaq Stock Market LLC

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

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

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

Large accelerated filer	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 August 1, 2022, there were 51,074,871 shares of the registrant’s common stock, no par value, outstanding.

Table of Contents

		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Consolidated Statements of Financial Condition	4
	Unaudited Consolidated Statements of Income	5
	Unaudited Consolidated Statements of Comprehensive Income	6
	Unaudited Consolidated Statements of Changes in Stockholders' Equity	7
	Unaudited Consolidated Statements of Cash Flows	9
	Notes to Unaudited Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	60
Item 4.	Controls and Procedures	63
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	64
Item 4.	Mine Safety Disclosures	64
Item 5.	Other Information	64
Item 6.	Exhibits	65
	Signatures	66

1

Cautionary Statements Regarding Forward-Looking Information

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including our current views with respect to, among other things, future events and our results of operations, financial condition, financial performance, plans and/or strategies. These forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and may be identified by use of words such as "anticipate," "believe," “continue,” "could," "estimate," "expect," “impact,” "intend," "seek," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions. These forward-looking statements are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control and involve a number of risks and uncertainties. Accordingly, we caution you that any such forward-looking statement is not a guarantee of future performance and that actual results may prove to be materially different from the results expressed or implied by the forward-looking statements due to a number of factors, including without limitation:

•the ongoing and dynamic nature of the COVID-19 pandemic and the impact of actions to mitigate any continuing effects from the COVID-19 pandemic;

•business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the tight labor market, supply chain disruptions, or turbulence in domestic or foreign financial markets;

•economic, market, operational, liquidity, credit, inflation and interest rate risks associated with our business;

•the occurrence of significant natural or man-made disasters, including fires, earthquakes and terrorist acts, as well as public health issues and other adverse external events that could harm our business;

•climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs;

•our management of risks inherent in our real estate loan portfolio, and the risk of a prolonged downturn in the real estate market, which could impair the value of our collateral and our ability to sell collateral upon any foreclosure;

•our ability to achieve organic loan and deposit growth and the composition of such growth;

•the fiscal position of the U.S. and the soundness of other financial institutions;

•changes in consumer spending and savings habits;

•technological changes;

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

•changing bank regulatory conditions, policies or programs, whether arising as new legislation or regulatory initiatives, that could lead to restrictions on activities of banks generally, or our subsidiary bank in particular, more restrictive regulatory capital requirements, increased costs, including deposit insurance premiums, regulation or prohibition of certain income producing activities or changes in the secondary market for loans and other products;

•increased competition in the financial services industry;

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

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

•the composition of our management team and our ability to attract and retain key personnel;

•material weaknesses in our internal control over financial reporting;

•systems failures or interruptions involving our information technology and telecommunications systems;

•potential exposure to fraud, negligence, computer theft and cyber-crime;

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

•the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the U.S. Securities and Exchange Commission ("SEC"), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board ("FASB") or other accounting standards setters, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the Current Expected Credit Loss (“CECL”) model, which will change how we estimate credit losses and may increase the required level of our allowance for credit losses after adoption on January 1, 2023; and

•political instability or the effects of war or other conflicts, including, but not limited to, the current conflict between Russia and Ukraine.

2

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in our annual report on Form 10-K for the year ended December 31, 2021, including under the caption “Risk Factors” in Item 1A of Part I, subsequent Quarterly Reports on Form 10-Q and other reports we file with the SEC. You should not place undue reliance on any of these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

3

PART I.

Item 1. Financial Statements

LUTHER BURBANK CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollar amounts in thousands)

	June 30, 2022 (unaudited)		December 31, 2021
ASSETS
Cash and cash equivalents	$	86,548	$	138,413
Available for sale debt securities, at fair value	661,432		647,317
Held to maturity debt securities, at amortized cost (fair value of $3,067 and $4,018 at June 30, 2022 and December 31, 2021, respectively)	3,162		3,829
Equity securities, at fair value	10,772		11,693
Loans receivable, net of allowance for loan losses of $35,535 and $35,535 at June 30, 2022 and December 31, 2021, respectively	6,602,294		6,261,885
Accrued interest receivable	19,297		17,761
Federal Home Loan Bank ("FHLB") stock, at cost	27,874		23,411
Premises and equipment, net	14,969		16,090
Goodwill	3,297		3,297
Prepaid expenses and other assets	100,871		56,261
Total assets	$	7,530,516	$	7,179,957
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	5,668,759	$	5,538,243
FHLB advances	954,947		751,647
Junior subordinated deferrable interest debentures	61,857		61,857
Senior debt
$95,000 face amount, 6.5% interest rate, due September 30, 2024 (less debt issuance costs of $276 and $338 at June 30, 2022 and December 31, 2021, respectively)	94,724		94,662
Accrued interest payable	276		118
Other liabilities and accrued expenses	78,331		64,297
Total liabilities	6,858,894		6,510,824
Commitments and contingencies (Note 16)
Stockholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized; none issued and outstanding at June 30, 2022 and December 31, 2021, respectively	—		—
Common stock, no par value; 100,000,000 shares authorized; 51,063,498 and 51,682,398 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	397,620		406,904
Retained earnings	295,297		262,141
Accumulated other comprehensive (loss) income, net of taxes	(21,295)		88
Total stockholders' equity	671,622		669,133
Total liabilities and stockholders' equity	$	7,530,516	$	7,179,957

See accompanying notes to unaudited consolidated financial statements

4

LUTHER BURBANK CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollar amounts in thousands, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Interest and fee income:
Loans	$	56,912	$	54,191	$	110,545	$	108,249
Investment securities	2,863		2,091		5,163		4,074
Cash, cash equivalents and restricted cash	198		34		265		84
Total interest and fee income	59,973		56,316		115,973		112,407
Interest expense:
Deposits	6,913		9,749		12,933		21,355
FHLB advances	3,628		3,839		6,725		7,772
Junior subordinated deferrable interest debentures	385		255		660		514
Senior debt	1,575		1,574		3,149		3,148
Total interest expense	12,501		15,417		23,467		32,789
Net interest income before provision for loan losses	47,472		40,899		92,506		79,618
Provision for (reversal of) loan losses	2,500		(2,500)		—		(5,000)
Net interest income after provision for loan losses	44,972		43,399		92,506		84,618
Noninterest income:
FHLB dividends	342		371		696		738
Other income	20		139		(276)		81
Total noninterest income	362		510		420		819
Noninterest expense:
Compensation and related benefits	7,070		8,641		17,289		19,021
Deposit insurance premium	479		467		960		939
Professional and regulatory fees	634		614		1,173		1,098
Occupancy	1,197		1,257		2,391		2,472
Depreciation and amortization	746		678		1,349		1,333
Data processing	1,007		873		1,995		1,846
Marketing	525		235		983		527
Other expenses	1,667		1,115		2,697		2,048
Total noninterest expense	13,325		13,880		28,837		29,284
Income before provision for income taxes	32,009		30,029		64,089		56,153
Provision for income taxes	9,442		8,813		18,582		16,526
Net income	$	22,567	$	21,216	$	45,507	$	39,627
Basic earnings per common share	$	0.44	$	0.41	$	0.89	$	0.76
Diluted earnings per common share	$	0.44	$	0.41	$	0.89	$	0.76
Dividends per common share	$	0.12	$	0.06	$	0.24	$	0.12

See accompanying notes to unaudited consolidated financial statements

5

LUTHER BURBANK CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollar amounts in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	22,567	$	21,216	$	45,507	$	39,627
Other comprehensive (loss) income:
Unrealized (loss) gain on available for sale debt securities:
Unrealized holding (loss) gain arising during the period	(13,150)		512		(30,115)		(3,303)
Tax effect	3,813		(150)		8,732		959
Total other comprehensive (loss) income, net of tax	(9,337)		362		(21,383)		(2,344)
Comprehensive income	$	13,230	$	21,578	$	24,124	$	37,283

See accompanying notes to unaudited consolidated financial statements

6

LUTHER BURBANK CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021 (UNAUDITED)

(Dollar amounts in thousands, except per share data)

						Accumulated Other Comprehensive Income (Loss) (Net of Taxes)		Total Stockholders' Equity
	Common Stock			Retained Earnings		Available for Sale Securities
	Shares	Amount
Balance, March 31, 2021	52,231,912	$	411,702	$	208,236	$	4,031	$	623,969
Net income	—	—		21,216		—		21,216
Other comprehensive income	—	—		—		362		362
Restricted stock award grants	6,395	—		—		—		—
Stock based compensation expense	—	651		—		—		651
Shares repurchased	(376,603)	(4,493)		—		—		(4,493)
Cash dividends ($0.06 per share)	—	—		(3,006)		—		(3,006)
Balance, June 30, 2021	51,861,704	$	407,860	$	226,446	$	4,393	$	638,699
Balance, March 31, 2022	51,403,914	$	401,102	$	278,856	$	(11,958)	$	668,000
Net income	—	—		22,567		—		22,567
Other comprehensive loss	—	—		—		(9,337)		(9,337)
Restricted stock forfeitures	(33,739)	(67)		12		—		(55)
Stock based compensation expense	—	683		—		—		683
Shares repurchased	(306,677)	(4,098)		—		—		(4,098)
Cash dividends ($0.12 per share)	—	—		(6,138)		—		(6,138)
Balance, June 30, 2022	51,063,498	$	397,620	$	295,297	$	(21,295)	$	671,622

See accompanying notes to unaudited consolidated financial statements

7

LUTHER BURBANK CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021 (UNAUDITED)

(Dollar amounts in thousands, except per share data)

						Accumulated Other Comprehensive Income (Loss) (Net of Taxes)		Total Stockholders' Equity
	Common Stock			Retained Earnings		Available for Sale Securities
	Shares	Amount
Balance, December 31, 2020	52,220,266	$	414,120	$	192,834	$	6,737	$	613,691
Net income	—	—		39,627		—		39,627
Other comprehensive loss	—	—		—		(2,344)		(2,344)
Restricted stock award grants	289,473	—		—		—		—
Settled restricted stock units	68,873	—		—		—		—
Shares withheld to pay taxes on stock based compensation	(85,825)	(901)		—		—		(901)
Restricted stock forfeitures	(52,798)	(67)		13		—		(54)
Stock based compensation expense	—	1,301		—		—		1,301
Shares repurchased	(578,285)	(6,593)		—		—		(6,593)
Cash dividends ($0.12 per share)	—	—		(6,028)		—		(6,028)
Balance, June 30, 2021	51,861,704	$	407,860	$	226,446	$	4,393	$	638,699
Balance, December 31, 2021	51,682,398	$	406,904	$	262,141	$	88	$	669,133
Net income	—	—		45,507		—		45,507
Other comprehensive loss	—	—		—		(21,383)		(21,383)
Restricted stock award grants	206,675	—		—		—		—
Settled restricted stock units	6,759	—		—		—		—
Shares withheld to pay taxes on stock based compensation	(62,422)	(875)		—		—		(875)
Restricted stock forfeitures	(37,839)	(71)		14		—		(57)
Stock based compensation expense	—	1,396		—		—		1,396
Shares repurchased	(732,073)	(9,734)		—		—		(9,734)
Cash dividends ($0.24 per share)	—	—		(12,365)		—		(12,365)
Balance, June 30, 2022	51,063,498	$	397,620	$	295,297	$	(21,295)	$	671,622

See accompanying notes to unaudited consolidated financial statements

8

LUTHER BURBANK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollar amounts in thousands)

	Six Months Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	45,507	$	39,627
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,349		1,333
Provision for (reversal of) loan losses	—		(5,000)
Amortization of deferred loan costs, net	8,815		9,831
Amortization of premiums on investment securities, net	528		1,225
Stock based compensation expense, net of forfeitures	1,325		1,234
Change in fair value of mortgage servicing rights	136		407
Change in fair value of equity securities	921		178
Other items, net	110		100
Effect of changes in:
Accrued interest receivable	(1,536)		(114)
Accrued interest payable	158		(861)
Prepaid expenses and other assets	(5,798)		2,539
Other liabilities and accrued expenses	(3,049)		(5,928)
Net cash provided by operating activities	48,466		44,571
Cash flows from investing activities:
Proceeds from maturities, paydowns and calls of available for sale debt securities	72,742		71,218
Proceeds from maturities and paydowns of held to maturity debt securities	659		3,070
Purchases of available for sale debt securities	(117,494)		(135,200)
Net increase in loans receivable	(362,403)		(123,673)
Purchase of loans, including discounts/premiums	—		(286,917)
Purchase of FHLB stock, net	(4,463)		(4,013)
Purchase of premises and equipment	(228)		(155)
Net cash used in investing activities	(411,187)		(475,670)
Cash flows from financing activities:
Net increase in deposits	130,516		137,643
Proceeds from long-term FHLB advances	150,000		150,000
Repayment of long-term FHLB advances	(100,000)		(180,000)
Net change in short-term FHLB advances	153,300		228,400
Shares withheld for taxes on vested restricted stock	(875)		(901)
Shares repurchased	(9,734)		(6,593)
Cash paid for dividends	(12,351)		(6,015)
Net cash provided by financing activities	310,856		322,534
Decrease in cash, cash equivalents and restricted cash	(51,865)		(108,565)
Cash, cash equivalents and restricted cash, beginning of period	138,413		178,861
Cash, cash equivalents and restricted cash, end of period	$	86,548	$	70,296
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	23,309	$	33,650
Income taxes	$	15,369	$	18,883
Supplemental non-cash disclosures:
Lease liabilities arising from obtaining right-of-use assets	$	17,514	$	—

See accompanying notes to unaudited consolidated financial statements

9

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 the Bank's wholly-owned subsidiary, Burbank Investor Services. The Company also owns Burbank Financial Inc., a real estate investment company that provides limited loan administrative support to the Bank, and all the common interests in Luther Burbank Statutory Trusts I and II, entities created to issue trust preferred securities.

The Bank conducts its business from its headquarters 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, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 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 six months ended June 30, 2022 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2022.

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.

10

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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	22,567	$	21,216	$	45,507	$	39,627
Weighted average basic common shares outstanding	50,794,950		51,726,331		51,066,219		51,854,531
Add: Dilutive effects of assumed vesting of restricted stock	112,312		134,802		94,621		125,155
Weighted average diluted common shares outstanding	50,907,262		51,861,133		51,160,840		51,979,686
Income per common share:
Basic EPS	$	0.44	$	0.41	$	0.89	$	0.76
Diluted EPS	$	0.44	$	0.41	$	0.89	$	0.76
Anti-dilutive shares not included in calculation of diluted earnings per share	1,359		—		433		2,706

Adoption of New Financial Accounting Standards

FASB ASU 2016-13

In June 2016, the Financial Accounting Standards Board ("FASB") issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss ("CECL") model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held to maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. The transition will be applied as follows:

-    For debt securities with other than temporary impairment ("OTTI"), the guidance will be applied prospectively.

-    Existing purchased credit impaired ("PCI") assets will be grandfathered and classified as purchased credit deteriorated ("PCD") assets at the date of adoption. The assets will be grossed up for the allowance for expected credit losses for all PCD assets at the date of adoption and will continue to recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date. Subsequent changes in expected credit losses will be recorded through the allowance.

-    For all other assets within the scope of CECL, a cumulative-effect adjustment will be recognized in retained earnings as of the beginning of the first reporting period in which the guidance is effective.

These amendments are effective for PBEs that are SEC filers for annual periods and interim periods within those annual periods beginning after December 15, 2019. As an emerging growth company, the Company expects to adopt this guidance on January 1, 2023. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective.

11

Through June 30, 2022, CECL implementation activities have generally focused on capturing and validating loan data, segmenting the loan portfolio, evaluating credit loss methodologies and models, as well as evaluating model results and sensitivities. In determining an expected allowance under CECL, the Company has selected a credit loss model that utilizes an approach focused on a loan's probability of default and loss given default. As part of the process to test and refine our CECL model, the Company has completed quarterly model runs for analysis and backtesting purposes starting with the third quarter of 2018. This process has been on-going and will continue until our adoption date. Continuing implementation activities include the completion of a third party model validation, refining qualitative factor adjustments, finalizing policies and disclosures and evaluating, documenting and testing internal controls. We estimate that the adoption of the CECL standard would not currently result in a material change in our allowance for credit losses, which, if necessary, will be recorded as a cumulative-effect adjustment to retained earnings, net of tax as of January 1, 2023. The ultimate impact will depend on the portfolio and forecasts when the standard is adopted.

2.     INVESTMENT SECURITIES

Available for Sale

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

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
At June 30, 2022:
Government and Government Sponsored Entities:
Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")	$	416,134	$	1,468	$	(16,427)	$	401,175
Residential MBS and CMOs	222,336		129		(14,033)		208,432
Agency bonds	25,576		225		—		25,801
Other asset backed securities ("ABS")	27,377		—		(1,353)		26,024
Total available for sale debt securities	$	691,423	$	1,822	$	(31,813)	$	661,432
At December 31, 2021:
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	407,111	$	3,281	$	(2,646)	$	407,746
Residential MBS and CMOs	200,775		1,225		(1,867)		200,133
Agency bonds	10,587		244		—		10,831
Other ABS	28,720		37		(150)		28,607
Total available for sale debt securities	$	647,193	$	4,787	$	(4,663)	$	647,317

Net unrealized gains (losses) on available for sale investment securities are recorded as accumulated other comprehensive income (loss) within stockholders’ equity and totaled $(21.3) million and $88 thousand, net of $8.7 million and $(36) thousand in tax assets (liabilities), at June 30, 2022 and December 31, 2021, 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 six months ended June 30, 2022 or 2021.

12

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:

	June 30, 2022
	Less than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	152,632	$	(8,905)	$	71,739	$	(7,522)	$	224,371	$	(16,427)
Residential MBS and CMOs	153,853		(9,659)		26,193		(4,374)		180,046		(14,033)
Other ABS	26,024		(1,353)		—		—		26,024		(1,353)
Total available for sale debt securities	$	332,509	$	(19,917)	$	97,932	$	(11,896)	$	430,441	$	(31,813)

At June 30, 2022, the Company held 89 residential MBS and CMOs of which 66 were in a loss position and six had been in a loss position for twelve months or more. The Company held 59 commercial MBS and CMOs of which 34 were in a loss position and ten had been in a loss position for twelve months or more. The Company held three other ABS of which three were in a loss position and none had been in a loss position for twelve months or more.

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

At December 31, 2021, the Company held 88 residential MBS and CMOs of which 14 were in a loss position and four had been in a loss position for twelve months or more. The Company held 54 commercial MBS and CMOs of which 20 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.

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 June 30, 2022 or December 31, 2021.

As of June 30, 2022 and December 31, 2021, there were no holdings of securities of any one issuer in an amount greater than 10% of stockholders' equity, other than the U.S. government and its agencies.

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Held to Maturity

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

(Dollars in thousands)	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Estimated Fair Value
As of June 30, 2022:
Government Sponsored Entities:
Residential MBS	$	3,097	$	—	$	(95)	$	3,002
Other investments	65		—		—		65
Total held to maturity investment securities	$	3,162	$	—	$	(95)	$	3,067
As of December 31, 2021:
Government Sponsored Entities:
Residential MBS	$	3,761	$	189	$	—	$	3,950
Other investments	68		—		—		68
Total held to maturity investment securities	$	3,829	$	189	$	—	$	4,018

The following table summarizes the gross unrecognized losses and fair value of held to maturity investment securities, aggregated by investment category and length of time that individual securities have been in a continuous unrecognized loss position:

	Less than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses
As of June 30, 2022:
Government Sponsored Entities:
Residential MBS	$	3,002	$	(95)	$	—	$	—	$	3,002	$	(95)

At June 30, 2022, the Company had seven held to maturity residential MBS of which seven were in a loss position and none had been in a loss position for twelve months or more.

The unrecognized losses on the Company’s held to maturity investments at June 30, 2022 were caused by interest rate changes. In addition, the contractual cash flows of these investments are guaranteed by agencies sponsored by the U.S. government. Accordingly, it is expected that the securities will not be settled at a price less than amortized cost. Because the decline in market value is attributable to changes in interest rates but not credit quality, and because the Company has the ability and intent to hold those investments until maturity, the Company does not consider these investments to be other-than-temporarily impaired at June 30, 2022.

The following table summarizes the scheduled maturities of available for sale and held to maturity investment securities as of June 30, 2022:

	June 30, 2022
(Dollars in thousands)	Amortized Cost		Fair Value
Available for sale debt securities
Five to ten years	$	25,576	$	25,801
MBS, CMOs and other ABS	665,847		635,631
Total available for sale debt securities	$	691,423	$	661,432
Held to maturity investments securities
Five to ten years	$	65	$	65
MBS	3,097		3,002
Total held to maturity debt securities	$	3,162	$	3,067

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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 June 30, 2022 or December 31, 2021.

Equity Securities

Equity securities consist of investments in a qualified community reinvestment fund. At June 30, 2022 and December 31, 2021, the fair value of equity securities totaled $10.8 million and $11.7 million, respectively. Changes in fair value are recognized in other noninterest income and totaled $(344) thousand and $(921) thousand during the three and six months ended June 30, 2022, respectively, compared to $33 thousand and $(178) thousand during the three and six months ended June 30, 2021, respectively. There were no sales of equity securities during the three or six months ended June 30, 2022 or 2021.

3.     LOANS

Loans consist of the following:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Permanent mortgages on:
Multifamily residential	$	4,414,725	$	4,210,735
Single family residential	2,011,374		1,881,676
Commercial real estate	184,708		187,097
Land and construction loans	27,022		17,912
Total	6,637,829		6,297,420
Allowance for loan losses	(35,535)		(35,535)
Loans held for investment, net	$	6,602,294	$	6,261,885

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

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The following table summarizes activity in and the allocation of the allowance for loan losses by portfolio segment:

(Dollars in thousands)	Multifamily Residential		Single Family Residential		Commercial Real Estate		Land and Construction		Total
Three months ended June 30, 2022
Allowance for loan losses:
Beginning balance allocated to portfolio segments	$	24,151	$	6,797	$	1,882	$	205	$	33,035
Provision for (reversal of) loan losses	1,856		828		(209)		25		2,500
Charge-offs	—		—		—		—		—
Recoveries	—		—		—		—		—
Ending balance allocated to portfolio segments	$	26,007	$	7,625	$	1,673	$	230	$	35,535
Three months ended June 30, 2021
Allowance for loan losses:
Beginning balance allocated to portfolio segments	$	30,838	$	9,816	$	2,871	$	241	$	43,766
Reversal of provision for loan losses	(724)		(1,546)		(166)		(64)		(2,500)
Charge-offs	—		—		—		—		—
Recoveries	—		62		—		7		69
Ending balance allocated to portfolio segments	$	30,114	$	8,332	$	2,705	$	184	$	41,335
Six months ended June 30, 2022
Allowance for loan losses:
Beginning balance allocated to portfolio segments	$	26,043	$	7,224	$	2,094	$	174	$	35,535
(Reversal of) provision for loan losses	(36)		401		(421)		56		—
Charge-offs	—		—		—		—		—
Recoveries	—		—		—		—		—
Ending balance allocated to portfolio segments	$	26,007	$	7,625	$	1,673	$	230	$	35,535
Six months ended June 30, 2021
Allowance for loan losses:
Beginning balance allocated to portfolio segments	$	33,259	$	9,372	$	3,347	$	236	$	46,214
Reversal of provision for loan losses	(3,145)		(1,104)		(642)		(109)		(5,000)
Charge-offs	—		—		—		—		—
Recoveries	—		64		—		57		121
Ending balance allocated to portfolio segments	$	30,114	$	8,332	$	2,705	$	184	$	41,335

16

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

(Dollars in thousands)	Multifamily Residential		Single Family Residential		Commercial Real Estate		Land and Construction		Total
As of June 30, 2022:
Ending allowance balance allocated to:
Loans individually evaluated for impairment	$	—	$	25	$	—	$	—	$	25
Loans collectively evaluated for impairment	26,007		7,600		1,673		230		35,510
Ending balance	$	26,007	$	7,625	$	1,673	$	230	$	35,535
Loans:
Ending balance: individually evaluated for impairment	$	852	$	8,012	$	—	$	—	$	8,864
Ending balance: collectively evaluated for impairment	4,413,873		2,003,362		184,708		27,022		6,628,965
Ending balance	$	4,414,725	$	2,011,374	$	184,708	$	27,022	$	6,637,829
As of December 31, 2021:
Ending allowance balance allocated to:
Loans individually evaluated for impairment	$	—	$	25	$	—	$	—	$	25
Loans collectively evaluated for impairment	26,043		7,199		2,094		174		35,510
Ending balance	$	26,043	$	7,224	$	2,094	$	174	$	35,535
Loans:
Ending balance: individually evaluated for impairment	$	505	$	5,687	$	—	$	—	$	6,192
Ending balance: collectively evaluated for impairment	4,210,230		1,875,989		187,097		17,912		6,291,228
Ending balance	$	4,210,735	$	1,881,676	$	187,097	$	17,912	$	6,297,420

The Company assigns a risk rating to all loans and periodically performs detailed reviews of all loans to identify credit risks and to assess the overall collectability of the portfolio. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, as well as the financial performance and/or other characteristics of loan collateral. These credit quality indicators are used to assign a risk rating to each individual loan. The risk ratings can be grouped into six major categories, defined as follows:

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

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

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

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

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

17

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 table summarizes the loan portfolio allocated by management’s internal risk ratings at June 30, 2022 and December 31, 2021.

(Dollars in thousands)	Multifamily Residential		Single Family Residential		Commercial Real Estate		Land, Construction and NM		Total
As of June 30, 2022:
Grade:
Pass	$	4,360,690	$	1,993,279	$	180,522	$	27,022	$	6,561,513
Watch	31,663		13,917		3,223		—		48,803
Special mention	4,058		—		963		—		5,021
Substandard	18,314		4,178		—		—		22,492
Total	$	4,414,725	$	2,011,374	$	184,708	$	27,022	$	6,637,829
As of December 31, 2021:
Grade:
Pass	$	4,129,767	$	1,856,942	$	180,950	$	17,523	$	6,185,182
Watch	66,062		22,946		6,147		389		95,544
Special mention	4,586		—		—		—		4,586
Substandard	10,320		1,788		—		—		12,108
Total	$	4,210,735	$	1,881,676	$	187,097	$	17,912	$	6,297,420

The following table summarizes an aging analysis of the loan portfolio by the time past due at June 30, 2022 and December 31, 2021:

(Dollars in thousands)	30 Days		60 Days		90+ Days		Non-accrual		Current		Total
As of June 30, 2022:
Loans:
Multifamily residential	$	2,957	$	—	$	—	$	852	$	4,410,916	$	4,414,725
Single family residential	359		—		—		4,178		2,006,837		2,011,374
Commercial real estate	—		—		—		—		184,708		184,708
Land and construction	—		—		—		—		27,022		27,022
Total	$	3,316	$	—	$	—	$	5,030	$	6,629,483	$	6,637,829
As of December 31, 2021:
Loans:
Multifamily residential	$	—	$	—	$	—	$	505	$	4,210,230	$	4,210,735
Single family residential	271		—		—		1,788		1,879,617		1,881,676
Commercial real estate	—		—		—		—		187,097		187,097
Land and construction	—		—		—		—		17,912		17,912
Total	$	271	$	—	$	—	$	2,293	$	6,294,856	$	6,297,420

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The following table summarizes information related to impaired loans at June 30, 2022 and December 31, 2021:

	As of June 30, 2022						As of December 31, 2021
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Multifamily residential	$	852	$	927	$	—	$	505	$	582	$	—
Single family residential	7,192		7,384		—		4,847		5,033		—
	8,044		8,311		—		5,352		5,615		—
With an allowance recorded:
Single family residential	820		817		25		840		836		25
	820		817		25		840		836		25
Total:
Multifamily residential	852		927		—		505		582		—
Single family residential	8,012		8,201		25		5,687		5,869		25
	$	8,864	$	9,128	$	25	$	6,192	$	6,451	$	25

The following tables summarize information related to impaired loans for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,
	2022						2021
(Dollars in thousands)	Average Recorded Investment		Interest Income		Cash Basis Interest		Average Recorded Investment		Interest Income		Cash Basis Interest
With no related allowance recorded:
Multifamily residential	$	767	$	17	$	17	$	908	$	8	$	8
Single family residential	6,219		37		10		4,872		50		28
	6,986		54		27		5,780		58		36
With an allowance recorded:
Single family residential	825		6		—		863		6		—
	825		6		—		863		6		—
Total:
Multifamily residential	767		17		17		908		8		8
Single family residential	7,044		43		10		5,735		56		28
	$	7,811	$	60	$	27	$	6,643	$	64	$	36

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	Six Months Ended June 30,
	2022						2021
(Dollars in thousands)	Average Recorded Investment		Interest Income		Cash Basis Interest		Average Recorded Investment		Interest Income		Cash Basis Interest
With no related allowance recorded:
Multifamily residential	$	654	$	25	$	25	$	967	$	14	$	14
Single family residential	5,626		80		29		5,431		111		85
	6,280		105		54		6,398		125		99
With an allowance recorded:
Single family residential	830		12		—		868		13		—
	830		12		—		868		13		—
Total:
Multifamily residential	654		25		25		967		14		14
Single family residential	6,456		92		29		6,299		124		85
	$	7,110	$	117	$	54	$	7,266	$	138	$	99

The following table summarizes the recorded investment related to troubled debt restructurings ("TDRs") at June 30, 2022 and December 31, 2021:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Troubled debt restructurings:
Single family residential	$	1,592	$	1,204

The Company has allocated $25 thousand of its allowance for loan losses for loans modified in TDRs at both June 30, 2022 and December 31, 2021. The Company does not have commitments to lend additional funds to borrowers with loans whose terms have been modified in TDRs.

During the six months ended June 30, 2022, the Company modified the terms of one loan that qualified as a TDR. The following table provides details of this modification:

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

Terms of the modification above included suspension of loan payments for six months and a similar extension of the loan term. The TDR above resulted in no increase to the allowance for loan losses and no charge-offs primarily due to collateral support provided by the secondary source of repayment. There were no new TDRs during the three or six months ended June 30, 2021.

The Company had no TDRs with a subsequent payment default within twelve months following the modification during the three or six months ended June 30, 2022 and 2021. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

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4.     NONPERFORMING ASSETS

Nonperforming assets include nonperforming loans plus real estate owned. The Company’s nonperforming assets at June 30, 2022 and December 31, 2021 are indicated below:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Non-accrual loans:
Multifamily residential	$	852	$	505
Single family residential	4,178		1,788
Total non-accrual loans	5,030		2,293
Real estate owned	—		—
Total nonperforming assets	$	5,030	$	2,293

Interest income on non-accrual loans is subsequently recognized on a cash basis as long as the remaining unpaid principal amount of the loans are deemed to be fully collectible. If there is doubt regarding the collectability of the loan, then any interest payments received are applied to principal. Interest income was recognized on a cash basis on non-accrual loans during the three and six months ended June 30, 2022 totaling $27 thousand and $54 thousand, respectively, compared to $36 thousand and $99 thousand during the three and six months ended June 30, 2021. Contractual interest not recorded on nonperforming loans during the three and six months ended June 30, 2022 totaled $17 thousand and $24 thousand, respectively, compared to $1 thousand and $16 thousand for the three and six months ended June 30, 2021, respectively.

Generally, nonaccrual loans are considered impaired because the repayment of the loan will not be made in accordance with the original contractual agreement.

5.     MORTGAGE SERVICING RIGHTS

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

(Dollars in thousands)	June 30, 2022		December 31, 2021
Mortgage loans serviced for:
Federal Home Loan Mortgage Corporation ("Freddie Mac")	$	93,840	$	127,431
Other financial institutions	48,683		58,298
Total mortgage loans serviced for others	$	142,523	$	185,729

Custodial account balances maintained in connection with serviced loans totaled $3.7 million and $5.0 million at June 30, 2022 and December 31, 2021, respectively.

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

21

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2022		2021		2022		2021
Beginning balance	$	811	$	1,428	$	915	$	1,599
Additions	—		—		—		—
Disposals	—		—		—		—
Changes in fair value due to changes in assumptions	—		—		—		—
Other changes in fair value	(32)		(236)		(136)		(407)
Ending balance	$	779	$	1,192	$	779	$	1,192

Fair value as of June 30, 2022 was determined using a discount rate of 10%, prepayment speeds ranging from 4.7% to 49.7% and a weighted average default rate of 5%. The weighted average prepayment speed at June 30, 2022 was 29.2%. Fair value as of December 31, 2021 was determined using a discount rate of 10%, prepayment speeds ranging from 7.6% to 48.8% and a weighted average default rate of 5%. The weighted average prepayment speed at December 31, 2021 was 29.2%.

6.     LEASES

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

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

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

22

Supplemental lease information as of or for the three and six months ended June 30, 2022 is as follows:

(Dollars in thousands)	June 30, 2022
Operating lease right-of-use assets included in prepaid expenses and other assets	$	15,393
Operating lease liabilities included in other liabilities and accrued expenses	$	15,682
Weighted average remaining lease term (years) of operating leases	4.9
Weighted average discount rate of operating leases	1.88		%

(Dollars in thousands)	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
Operating lease costs included in occupancy expense	$	910	$	1,839
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,014	$	2,051

At June 30, 2022, future undiscounted lease payments with initial terms of one year or more are as follows:

(Dollars in thousands)
July 1 - December 31, 2022	$	1,942
2023	3,719
2024	3,013
2025	2,594
2026	2,398
Thereafter	2,841
Total undiscounted lease payments	16,507
Less: Imputed interest	(825)
Net lease liabilities	$	15,682

7.     DEPOSITS

A summary of deposits at June 30, 2022 and December 31, 2021 is as follows:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Money market savings	$	2,353,150	$	2,294,367
Time deposits	2,240,395		2,335,141
Money market checking	671,310		580,325
Interest-bearing demand	230,587		176,126
Noninterest-bearing demand	173,317		152,284
Total	$	5,668,759	$	5,538,243

The Company had time deposits that met or exceeded the Federal Deposit Insurance Corporation ("FDIC") insurance limit of $250 thousand of $973.4 million and $1.1 billion at June 30, 2022 and December 31, 2021, respectively.

The Company utilizes brokered deposits as an additional source of funding. The Company had brokered deposits of $123.1 million and $25.8 million at June 30, 2022 and December 31, 2021, respectively.

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Maturities of the Company’s time deposits at June 30, 2022 are summarized as follows:

(Dollars in thousands)
July 1 - December 31, 2022	$	1,355,883
2023	732,749
2024	95,164
2025	7,830
2026	41,073
Thereafter	7,696
Total	$	2,240,395

8.     FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES

The Bank may borrow from the FHLB, on either a short-term or long-term basis, up to 40% of its assets, provided that adequate collateral has been pledged. As of June 30, 2022 and December 31, 2021, the Bank had pledged various mortgage loans totaling approximately $2.8 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 $579.7 million and $583.0 million as of June 30, 2022 and December 31, 2021, respectively, secure this borrowing arrangement. There were no borrowings outstanding with the FRB as of June 30, 2022 or December 31, 2021.

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

	Outstanding Balances				As of June 30, 2022
(Dollars in thousands)	June 30, 2022		December 31, 2021		Minimum Interest Rate		Maximum Interest Rate		Weighted Average Rate		Maturity Dates
Fixed rate short-term	$	153,300	$	—	1.66	%	1.75	%	1.70	%	July 2022
Fixed rate long-term	801,647		751,647		0.38	%	7.33	%	1.81	%	March 2023 to March 2030
	$	954,947	$	751,647

The Bank's available borrowing capacity based on pledged loans to the FHLB and the FRB totaled $1.1 billion and $1.2 billion at June 30, 2022 and December 31, 2021, respectively. As of both June 30, 2022 and December 31, 2021, the Bank had aggregate loan balances of $2.5 billion available to pledge to the FHLB and FRB to increase its borrowing capacity. As of June 30, 2022 and December 31, 2021, the Bank pledged as collateral a $62.6 million FHLB letter of credit to Freddie Mac related to our multifamily securitization reimbursement obligation.

Short-term borrowings are borrowings with original maturities of 90 days or less. During the three and six months ended June 30, 2022, there was a maximum amount of short-term borrowings outstanding of $228.4 million for both periods, an average amount outstanding of $95.0 million and $58.6 million, respectively, with a weighted average interest rate of 1.05% and 0.92%, respectively. During the three and six months June 30, 2021, there was a maximum amount of short-term borrowings outstanding of $352.9 million for both periods, an average amount outstanding of $242.1 million and $165.9 million, respectively, with a weighted average interest rate of 0.13% and 0.14%, respectively.

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The following table summarizes scheduled principal payments on FHLB advances over the next five years as of June 30, 2022:

(Dollars in thousands)
July 1 - December 31, 2022	$	153,300
2023	250,000
2024	350,000
2025	101,500
2026	100,000
Thereafter	147
	$	954,947

9.     JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

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

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

The Company has entered into contractual arrangements which, taken collectively, fully and unconditionally guarantee payment of: (i) accrued and unpaid distributions required to be paid on the Trust 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, 2022 and December 31, 2021:

	June 30, 2022				December 31, 2021				Date	Maturity	Rate Index
Issuer	Amount		Rate		Amount		Rate		Issued	Date	(Quarterly Reset)
(Dollars in thousands)
Luther Burbank Statutory Trust I	$	41,238	3.21	%	$	41,238	1.58	%	3/1/2006	6/15/2036	3 month LIBOR + 1.38%
Luther Burbank Statutory Trust II	$	20,619	3.45	%	$	20,619	1.82	%	3/1/2007	6/15/2037	3 month LIBOR + 1.62%

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10.     SENIOR DEBT

In September 2014, the Company issued $95 million in senior unsecured term notes to qualified institutional investors. The following table summarizes information on these notes as of June 30, 2022 and December 31, 2021:

	June 30, 2022				December 31, 2021
(Dollars in thousands)	Principal		Unamortized Debt Issuance Costs		Principal		Unamortized Debt Issuance Costs		Maturity Date	Fixed Interest Rate
Senior Unsecured Term Notes	$	95,000	$	276	$	95,000	$	338	9/30/2024	6.50	%

11.     DERIVATIVES AND HEDGING ACTIVITIES

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

Fair Value Hedges of Interest Rate Risk

As of June 30, 2022, the Company held five interest rate swaps with a total notional amount of $950 million. During the six months ended June 30, 2022, the Company entered into three new swap agreements with an aggregate notional amount of $300.0 million. The other two swaps were entered into in February and June 2021. The swaps provide a hedge against the interest rate risk associated with both fixed rate loans and hybrid adjustable loans in their fixed rate period. Additionally, during the three and six months ended June 30, 2021, the Company also held two separate, two-year interest rate swaps with a total notional amount of $1.0 billion. These swaps, which were in equal notional amounts of $500.0 million, matured in June and August 2021, and provided a hedge against the interest rate risk related to certain hybrid multifamily loans which were in their fixed rate period.

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

The following table presents the effect of the Company’s interest rate swaps on the unaudited consolidated statements of income for the three and six months ended June 30, 2022 and 2021:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Dollars in thousands)	2022		2021		2022		2021
Derivative - interest rate swaps:
Interest income (loss)	$	498	$	(3,302)	$	433	$	(6,719)
Hedged items - loans:
Interest loss	(35)		(14)		(48)		(29)
Net increase (decrease) in interest income	$	463	$	(3,316)	$	385	$	(6,748)

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The following table presents the fair value of the Company’s interest rate swaps, as well as their classification in the consolidated statements of financial condition as of June 30, 2022 and December 31, 2021:

			Fair Values of Derivative Instruments
			Asset Derivatives			Liability Derivatives
(Dollars in thousands)	Notional Amount		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
As of June 30, 2022:
Interest Rate Swaps	$	950,000	Prepaid Expenses and Other Assets	$	16,271	Other Liabilities and Accrued Expenses	$	32
As of December 31, 2021:
Interest Rate Swaps	$	650,000	Prepaid Expenses and Other Assets	$	3,108	Other Liabilities and Accrued Expenses	$	—

As of June 30, 2022 and December 31, 2021, the following amounts were recorded in the consolidated statements of financial condition related to cumulative basis adjustments for its fair value hedges:

Line Item in the Consolidated Statements of Financial Condition in Which the Hedged Items are Included (1)	Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
(Dollars in thousands)
As of June 30, 2022:
Loans receivable, net	$	933,711	$	(16,289)
As of December 31, 2021:
Loans receivable, net	$	646,890	$	(3,110)

(1) These amounts include the amortized cost basis of portfolio loans used to designate hedging relationships in which the hedged items are the last layer expected to be remaining at the end of the hedging relationship. At June 30, 2022 and December 31, 2021, the amortized cost basis of the portfolio loans used in these hedging relationships were $1.4 billion and $1.0 billion, respectively.

12.     STOCK BASED COMPENSATION

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

All RSAs and RSUs are granted at the fair value of the common stock at the time of the award. RSAs and RSUs are considered fixed awards as the number of shares and fair value are known at the date of grant and the fair value at the grant date is amortized over the vesting and/or service period. Non-cash stock compensation expense recognized for RSAs for the three and six months ended June 30, 2022 totaled $616 thousand and $1.3 million, respectively, compared with $651 thousand and $1.2 million for the three and six months ended June 30, 2021, respectively The fair value of RSAs and RSUs that vested during the six months ended June 30, 2022 and 2021 totaled $2.6 million and $2.4 million, respectively. No RSAs or RSUs vested during the three months ended June 30, 2022 or 2021.

As of June 30, 2022 and December 31, 2021, there was $3.6 million and $2.6 million, respectively, of unrecognized compensation expense related to 411,592 and 489,703 unvested RSAs, respectively, which amounts were expected to be expensed over a weighted average period of 1.88 years and 1.69 years,

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respectively. As of June 30, 2022 and December 31, 2021, 84,727 and 91,486 shares, respectively, of RSUs were vested and remain unsettled per the original deferral elections.

The following table summarizes share information about RSAs and RSUs:

	Six Months Ended June 30,
	2022			2021
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Beginning of the period balance	581,189	$	10.56	605,916	$	10.93
Shares granted	206,675	13.81		289,473	10.11
Shares settled	(253,706)	10.45		(265,655)	11.02
Shares forfeited	(37,839)	11.97		(52,798)	10.26
End of the period balance	496,319	$	11.86	576,936	$	10.53

Under its Omnibus Plan, the Company reserved 3,360,000 shares of common stock for new awards. At June 30, 2022 and December 31, 2021, there were 1,692,508 and 1,861,344 shares, respectively, of common stock reserved and available for grant through restricted stock or other awards under the Omnibus Plan. RSU awards were initially issued to replace unvested phantom stock awards under the Luther Burbank Corporation Phantom Stock Plan and were excluded from the shares reserved and available for grant under the Omnibus Plan. As of January 1, 2021, all RSUs were fully vested and no longer subject to forfeiture.

13.     FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

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

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

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

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

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

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

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

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

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

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

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

Loans were valued using the exit price notion. The fair value was estimated using market quotes for similar assets or the present value of future cash flows, discounted using a market rate for similar products and giving consideration to estimated prepayment risk and credit risk. The fair value of loans was determined utilizing estimates resulting in a Level 3 classification.

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

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

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

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

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

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

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

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

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Fair Value of Financial Instruments

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

					Fair Level Measurements Using
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
As of June 30, 2022:
Financial assets:
Cash and cash equivalents	$	86,548	$	86,548	$	86,548	$	—	$	—
Debt securities:
Available for sale	661,432		661,432		—		661,432		—
Held to maturity	3,162		3,067		—		3,067		—
Equity securities	10,772		10,772		—		10,772		—
Loans receivable, net	6,602,294		6,584,788		—		—		6,584,788
Accrued interest receivable	19,297		19,297		3		1,148		18,146
FHLB stock	27,874		N/A		N/A		N/A		N/A
Interest rate swaps	16,271		16,271		—		16,271		—
Financial liabilities:
Deposits	$	5,668,759	$	5,636,060	$	3,143,363	$	2,492,697	$	—
FHLB advances	954,947		954,909		—		954,909		—
Junior subordinated deferrable interest debentures	61,857		51,290		—		51,290		—
Senior debt	94,724		94,194		—		94,194		—
Accrued interest payable	276		276		—		276		—
Interest rate swap	32		32		—		32		—
As of December 31, 2021:
Financial assets:
Cash and cash equivalents	$	138,413	$	138,413	$	138,413	$	—	$	—
Debt securities:
Available for sale	647,317		647,317		—		647,317		—
Held to maturity	3,829		4,018		—		4,018		—
Equity securities	11,693		11,693		—		11,693		—
Loans receivable, net	6,261,885		6,297,548		—		—		6,297,548
Accrued interest receivable	17,761		17,761		1		927		16,833
FHLB stock	23,411		N/A		N/A		N/A		N/A
Interest rate swaps	3,108		3,108		—		3,108		—
Financial liabilities:
Deposits	$	5,538,243	$	5,541,417	$	2,918,102	$	2,623,315	$	—
FHLB advances	751,647		755,981		—		755,981		—
Junior subordinated deferrable interest debentures	61,857		61,545		—		61,545		—
Senior debt	94,662		103,361		—		103,361		—
Accrued interest payable	118		118		—		118		—

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

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Assets and Liabilities Recorded at Fair Value

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis as of June 30, 2022 and December 31, 2021.

Recurring Basis

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

(Dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
As of June 30, 2022:
Financial Assets:
Available for sale debt securities:
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	401,175	$	—	$	401,175	$	—
Residential MBS and CMOs	208,432		—		208,432		—
Agency bonds	25,801		—		25,801		—
Other ABS	26,024		—		26,024		—
Total available for sale debt securities	$	661,432	$	—	$	661,432	$	—
Equity securities	$	10,772	$	—	$	10,772	$	—
Mortgage servicing rights	779		—		—		779
Interest rate swaps	16,271		—		16,271		—
Financial Liabilities:
Interest rate swap	$	32	$	—	$	32	$	—
As of December 31, 2021:
Financial Assets:
Available for sale debt securities:
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	407,746	$	—	$	407,746	$	—
Residential MBS and CMOs	200,133		—		200,133		—
Agency bonds	10,831		—		10,831		—
Other ABS	28,607		—		28,607		—
Total available for sale debt securities	$	647,317	$	—	$	647,317	$	—
Equity securities	$	11,693	$	—	$	11,693	$	—
Mortgage servicing rights	915		—		—		915
Interest rate swaps	3,108		—		3,108		—

There were no transfers between Level 1 and Level 2 during the three and six months ended June 30, 2022 or 2021.

Non-recurring Basis

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

At both June 30, 2022 and December 31, 2021, there were no assets or liabilities measured at fair value on a non-recurring basis and the Company held no other real estate owned.

14.     VARIABLE INTEREST ENTITIES ("VIE")

The Company is involved with VIEs through its loan securitization activities. The Company evaluated its association with VIEs for consolidation purposes. Specifically, a VIE is to be consolidated by its primary

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beneficiary, the entity that has both the power to direct the activities that most significantly impact the VIE, and a variable interest that could potentially be significant to the VIE. A variable interest is a contractual, ownership or other interest whose value fluctuates with the changes in the value of the VIE's assets and liabilities. The assessment includes an evaluation of the Company's continuing involvement with the VIE and the nature and significance of its variable interests.

Multifamily loan securitization

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

The Company believes its maximum exposure to loss as a result of involvement with the VIE associated with the securitization under the reimbursement agreement executed with Freddie Mac is 10% of the original principal amount of the loans comprising the securitization pool, or $62.6 million. The reserve for estimated losses with respect to the reimbursement obligation totaled $542 thousand and $727 thousand as of June 30, 2022 and December 31, 2021, respectively, based upon an analysis of quantitative and qualitative data of the underlying loans included in the securitization pool. No disbursements have been made in connection with the reimbursement obligation.

15.     LOAN SALE AND SECURITIZATION ACTIVITIES

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

As sub-servicer for Freddie Mac, the Bank is required to maintain a minimum net worth in accordance with GAAP of not less than $2.0 million. If the Bank's capital were to fall below this threshold, Freddie Mac would have the authority to terminate and assume the Bank’s sub-servicing duties. At June 30, 2022, the Bank’s net worth was $814.9 million which equates to its Tier 1 capital of $832.9 million plus goodwill of $3.3 million and accumulated other comprehensive loss related to net unrealized losses on available for sale securities of $21.3 million.

General representations and warranties associated with loan sales and the securitization transaction require the Company to uphold various assertions that pertain to the underlying loans at the time of the transaction, including, but not limited to, compliance with relevant laws and regulations, absence of fraud, enforcement of liens, no environmental damages, and maintenance of relevant environmental insurance. Such representations and warranties are limited to those that do not meet the quality represented at the transaction date and do not pertain to a decline in value or future payment defaults. In circumstances

32

where the Company breaches its representations and warranties, the Company would generally be required to cure such instances through a repurchase or substitution of the subject loan(s).

With respect to the securitization transaction, the Company also has continuing involvement through a reimbursement agreement executed with Freddie Mac. To the extent the ultimate resolution of defaulted loans results in contractual principal and interest payments that are deficient, the Company is obligated to reimburse Freddie Mac for such amounts, not to exceed 10% of the original principal amount of the loans comprising the securitization pool at the closing date of September 27, 2017.

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

	Three Months Ended June 30,		Six Months Ended June 30,
(Dollars in thousands)	2022	2021	2022	2021
Servicing fees	89	147	186	317

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

(Dollars in thousands)	Single Family Residential		Multifamily Residential
As of June 30, 2022:
Principal balance of loans	$	11,414	$	131,109
Loans 90+ days past due	—		—
Charge-offs, net	—		—
As of December 31, 2021:
Principal balance of loans	$	12,243	$	173,486
Loans 90+ days past due	—		—
Charge-offs, net	—		—

16.     COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance Sheet Risk

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

Commitments to fund loans and lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have expiration dates or other termination clauses. In addition, external market forces may impact the probability of commitments being exercised; therefore, total commitments outstanding do not necessarily represent future cash requirements.

At June 30, 2022 and December 31, 2021, the Company had outstanding commitments of approximately $162.7 million and $132.8 million, respectively, for loans and lines of credit. Unfunded commitment reserves totaled $118 thousand and $153 thousand at June 30, 2022 and December 31, 2021, respectively.

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Contingencies

At present, there are no pending or threatened proceedings against the Company which, if determined adversely, would have a material effect on the Company’s business, financial position, results of operations or cash flows. In the ordinary course of operations, the Company may be party to various legal proceedings.

Correspondent Banking Agreements

The Company maintains funds on deposit with other federally insured financial institutions under correspondent banking agreements. Insured portions of these balances are limited to $250 thousand per institution based on FDIC insurance limits. At both June 30, 2022 and December 31, 2021, the Company had $25.5 million in uninsured available cash balances. The Company also has established federal funds lines of credit with correspondent banks totaling $50.0 million at both June 30, 2022 and December 31, 2021, none of which were advanced at those dates. The Company periodically monitors the financial condition and capital adequacy of these correspondent banks.

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

The following is a discussion of our financial condition at June 30, 2022 and December 31, 2021 and our results of operations for the three months ended June 30, 2022 and March 31, 2022 and the six months ended June 30, 2022 and 2021, and should be read in conjunction with our audited consolidated financial statements set forth in our Annual Report on Form 10-K for the year ended December 31, 2021 that was filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2022 (our “Annual Report”) and with the accompanying Notes to Unaudited Consolidated Financial Statements set forth in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022 (this “Report”). Because we conduct all of our material business operations through our bank subsidiary, Luther Burbank Savings (the "Bank"), the discussion and analysis relates to activities primarily conducted by the Bank.

Overview

We are a bank holding company headquartered in Santa Rosa, California, and the parent company of Luther Burbank Savings, a California-chartered commercial bank headquartered in Gardena, California with $7.5 billion in assets at June 30, 2022. Our principal business is providing high-value, relationship-based banking products and services to our customers, which include real estate investors, professionals, entrepreneurs, depositors and commercial businesses. We generate most of our revenue from interest on loans and investments. Our primary source of funding for our loans is retail deposits and we place secondary reliance on wholesale funding, primarily borrowings from the FHLB and brokered deposits. Our largest expenses are interest on deposits and borrowings along with salaries and related employee benefits. Our principal lending products are real estate secured loans, consisting primarily of multifamily residential properties and jumbo single family residential properties on the West Coast.

Selected Financial Data

The following table sets forth the Company’s selected historical consolidated financial data for the periods and as of the dates indicated. You should read this information together with the Company’s audited consolidated financial statements included in our Annual Report and the unaudited consolidated financial statements and related notes included elsewhere in this Report. The selected historical consolidated financial data as of and for the three and six months ended June 30, 2022 and 2021 are derived from our unaudited consolidated financial statements, which are included elsewhere in this Report. The selected historical consolidated financial data for the three months ended March 31, 2022 are derived from our unaudited consolidated financial statements which were included in our previously filed Form 10-Q on May 6, 2022. The Company’s historical results for any prior period are not necessarily indicative of future performance.

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(Dollars in thousands, except per share data)	As of or For the Three Months Ended						As of or For the Six Months Ended
	June 30, 2022			March 31, 2022			June 30, 2022			June 30, 2021
Statements of Income and Financial Condition Data
Net Income	$	22,567		$	22,940		$	45,507		$	39,627
Pre-tax, pre-provision net earnings (1)	$	34,509		$	29,580		$	64,089		$	51,153
Total assets	$	7,530,516		$	7,260,826		$	7,530,516		$	7,257,078
Per Common Share
Diluted earnings per share	$	0.44		$	0.45		$	0.89		$	0.76
Book value per share	$	13.15		$	13.00		$	13.15		$	12.32
Tangible book value per share (1)	$	13.09		$	12.93		$	13.09		$	12.25
Selected Ratios
Return on average:
Assets	1.23		%	1.28		%	1.25		%	1.12		%
Stockholders' equity	13.41		%	13.60		%	13.50		%	12.58		%
Dividend payout ratio	27.15		%	27.14		%	27.14		%	15.18		%
Net interest margin	2.62		%	2.54		%	2.58		%	2.27		%
Efficiency ratio (1)	27.86		%	34.40		%	31.03		%	36.41		%
Noninterest expense to average assets	0.72		%	0.86		%	0.79		%	0.83		%
Loan to deposit ratio	117.09		%	113.66		%	117.09		%	119.28		%
Credit Quality Ratios
Allowance for loan losses to loans	0.54		%	0.52		%	0.54		%	0.64		%
Allowance for loan losses to nonperforming loans	706.46		%	1,450.81		%	706.46		%	5,846.53		%
Nonperforming assets to total assets	0.07		%	0.03		%	0.07		%	0.01		%
Net recoveries to average loans	—		%	—		%	—		%	(0.00)		%
Capital Ratios
Tier 1 leverage ratio	10.20		%	10.27		%	10.20		%	9.70		%
Total risk-based capital ratio	19.12		%	19.37		%	19.12		%	18.33		%
(1) Considered a non-GAAP financial measure. See Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ‘‘Non-GAAP Financial Measures’’ for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure. Pre-tax, pre-provision net earnings is defined as net income before taxes and provision for loan losses. Tangible book value per share is defined as total assets less goodwill and total liabilities divided by period end shares outstanding. Efficiency ratio is defined as the ratio of noninterest expense to net interest income plus noninterest income.

Critical Accounting Policies and Estimates

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

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

Pursuant to the Jumpstart Our Business Startups Act (the "JOBS Act"), as an emerging growth company, we can

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elect to opt out of the extended transition period for adopting any new or revised accounting standards. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we may adopt the standard for the private company.

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

Allowance for Loan Losses

The allowance for loan losses is provided for probable incurred credit losses inherent in the loan portfolio at the statement of financial condition date. The allowance is increased by a provision charged to expense and can be reduced by loan principal charge-offs, net of recoveries. The allowance can also be reduced by recapturing provisions when management determines that the allowance for loan losses is more than adequate to absorb the probable incurred credit losses in the portfolio. The allowance is based on management’s assessment of various factors including, but not limited to, the nature of the loan portfolio, previous loss experience, known and inherent risks in the portfolio, the estimated value of underlying collateral, information that may affect a borrower’s ability to repay, current economic conditions and the results of our ongoing reviews of the portfolio. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance. Such agencies may require the Bank to recognize additions to the allowance based on judgments different from those of management.

While we use available information, including independent appraisals for collateral, to estimate the extent of probable incurred loan losses within the loan portfolio, inherent uncertainties in the estimation process make it reasonably possible that ultimate losses may vary significantly from our original estimates. In addition, we utilize a number of economic variables in estimating the allowance, with the most significant drivers being unemployment levels and housing prices. Material changes in these economic variables may result in incremental changes in the estimated level of our allowance. Generally, loans are partially or fully charged off when it is determined that the unpaid principal balance exceeds the current fair value of the collateral with no other likely source of repayment. The Company currently utilizes the incurred loss methodology to determine its allowance for loan losses. The Company expects to adopt the current expected credit loss ("CECL") allowance methodology on January 1, 2023. We estimate that the adoption of the CECL standard would not currently result in a material change in our allowance for credit losses, which, if necessary, will be recorded as a cumulative-effect adjustment to retained earnings, net of tax as of January 1, 2023. The ultimate impact will depend on the portfolio and forecasts when the standard is adopted.

Fair Value Measurement

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

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

Investment Securities Impairment

We assess on a quarterly basis whether there have been any events or economic circumstances to indicate that a security in which we have an unrealized loss is impaired on an other-than-temporary basis. In any instance, we

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

Non-GAAP Financial Measures

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

Our management uses these non‐GAAP financial measures in their analysis of the Company’s performance, financial condition and the efficiency of its operations. We believe that these non‐GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods and other companies, as well as demonstrate the effects of significant changes in the current period. We also believe that investors find these non‐GAAP financial measures useful as they assist investors in understanding our underlying operating performance and the analysis of ongoing operating trends. However, we acknowledge that our non-GAAP financial measures have a number of limitations. You should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other banking companies use. Other banking companies may use names similar to those we use for the non-GAAP financial measures we disclose, but may calculate them differently. You should understand how we and other companies each calculate their non-GAAP financial measures when making comparisons.

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

	For the Three Months Ended						For the Six Months Ended
(Dollars in thousands)	June 30, 2022			March 31, 2022			June 30, 2022			June 30, 2021
Pre-tax, Pre-provision Net Earnings
Income before taxes	$	32,009		$	32,080		$	64,089		$	56,153
Plus: Provision for (reversal of) loan losses	2,500			(2,500)			—			(5,000)
Pre-tax, pre-provision net earnings	$	34,509		$	29,580		$	64,089		$	51,153
Efficiency Ratio
Noninterest expense (numerator)	$	13,325		$	15,512		$	28,837		$	29,284
Net interest income	$	47,472		$	45,034		92,506			79,618
Noninterest income	362			58			420			819
Operating revenue (denominator)	$	47,834		$	45,092		$	92,926		$	80,437
Efficiency ratio	27.86		%	34.40		%	31.03		%	36.41		%

(Dollars in thousands, except per share data)	June 30, 2022		March 31, 2022		June 30, 2021
Tangible Book Value Per Share
Total assets	$	7,530,516	$	7,260,826	$	7,257,078
Less: Goodwill	(3,297)		(3,297)		(3,297)
Tangible assets	7,527,219		7,257,529		7,253,781
Less: Total liabilities	(6,858,894)		(6,592,826)		(6,618,379)
Tangible stockholders' equity (numerator)	$	668,325	$	664,703	$	635,402
Period end shares outstanding (denominator)	51,063,498		51,403,914		51,861,704
Tangible book value per share	$	13.09	$	12.93	$	12.25

Results of Operations - Three Months Ended June 30, 2022 and March 31, 2022

Overview

For the three months ended June 30, 2022, our net income was $22.6 million as compared to $22.9 million for the

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three months ended March 31, 2022. The decrease of $373 thousand, or 1.6%, was attributable to an increase in the provision for loan losses of $5.0 million, partially offset by an increase in net interest income of $2.4 million and a decrease in noninterest expense of $2.2 million. Pre-tax, pre-provision net earnings increased by $4.9 million, or 16.7%, for the three months ended June 30, 2022 as compared to the linked quarter.

Net Interest Income

Net interest income increased by $2.4 million, or 5.4%, to $47.5 million for the three months ended June 30, 2022 from $45.0 million for the prior quarter due to higher loan interest income, partially offset by higher interest expense on our deposit portfolio and FHLB advances. The increase in loan interest income was primarily due to an increase in the average balance of loans, lower accelerated loan cost amortization on paid off single family residential loans and higher income earned on our interest rate swaps. The increase in interest expense was primarily due to higher interest rates on deposits and an increase in the average balance and cost of FHLB advances. As compared to the linked quarter, the average balance and yield on our loan portfolio increased by $202.9 million and 9 basis points, respectively, while the average balance and cost of interest bearing deposits and FHLB advances increased by $56.8 million and 5 basis points, respectively, and $102.6 million and 3 basis points, respectively.

Our net interest margin was 2.62% during the three months ended June 30, 2022 compared to 2.54% during the prior quarter. Our net interest margin reflects the net impact of an increase in the yield on interest earning assets partly offset by an increase in the cost of interest bearing liabilities. During the second quarter, the yield on our interest earning assets increased by 15 basis points primarily due to the increase in loan yield, while the cost of our interest bearing liabilities increased by 7 basis points primarily due to the increase in deposit costs. Our net interest spread in the second quarter was 2.54%, increasing by 8 basis points as compared to the linked quarter.

Average balance sheet, interest and yield/rate analysis. The following table presents average balance sheet information, interest income, interest expense and the corresponding average yield earned and rates paid for the three months ended June 30, 2022 and March 31, 2022. The average balances are daily averages.

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	For the Three Months Ended
	June 30, 2022						March 31, 2022
(Dollars in thousands)	Average Balance		Interest Inc/Exp		Yield/Rate		Average Balance		Interest Inc/Exp		Yield/Rate
Interest-Earning Assets
Multifamily residential	$	4,318,879	$	39,893	3.69	%	$	4,211,697	$	39,146	3.72	%
Single family residential	1,961,812		14,430		2.94	%	1,867,416		12,025		2.58	%
Commercial real estate	189,705		2,256		4.76	%	193,871		2,204		4.55	%
Construction and land	25,784		333		5.18	%	20,341		258		5.14	%
Total loans (1)	6,496,180		56,912		3.50	%	6,293,325		53,633		3.41	%
Investment securities	650,514		2,863		1.76	%	650,091		2,301		1.42	%
Cash and cash equivalents	101,873		198		0.78	%	153,370		66		0.17	%
Total interest-earning assets	7,248,567		59,973		3.31	%	7,096,786		56,000		3.16	%
Noninterest-earning assets (2)	109,408						92,904
Total assets	$	7,357,975					$	7,189,690
Interest-Bearing Liabilities
Transaction accounts	$	175,092	88		0.20	%	$	169,580	95		0.22	%
Money market demand accounts	3,050,811		3,966		0.51	%	2,964,527		3,222		0.43	%
Time deposits	2,196,455		2,859		0.51	%	2,231,471		2,703		0.49	%
Total deposits	5,422,358		6,913		0.50	%	5,365,578		6,020		0.45	%
FHLB advances	863,685		3,628		1.68	%	761,119		3,097		1.65	%
Junior subordinated debentures	61,857		385		2.50	%	61,857		275		1.80	%
Senior debt	94,703		1,575		6.65	%	94,673		1,574		6.65	%
Total interest-bearing liabilities	6,442,603		12,501		0.77	%	6,283,227		10,966		0.70	%
Noninterest-bearing deposit accounts	165,799						147,533
Other noninterest-bearing liabilities	76,412						84,022
Total liabilities	6,684,814						6,514,782
Total stockholders' equity	673,161						674,908
Total liabilities and stockholders' equity	$	7,357,975					$	7,189,690
Net interest spread (3)					2.54	%					2.46	%
Net interest income/margin (4)			$	47,472	2.62	%			$	45,034	2.54	%

(1)     Non-accrual loans are included in total loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of deferred loan costs, net of deferred loan fees. Net deferred loan cost amortization totaled $4.0 million and $4.8 million for the three months ended June 30, 2022 and March 31, 2022, respectively.

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

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

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

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

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	Three Months Ended June 30 vs March 31, 2022
	Variance Due To
(Dollars in thousands)	Volume		Yield/Rate		Total
Interest-Earning Assets
Multifamily residential	$	1,047	$	(300)	$	747
Single family residential	640		1,765		2,405
Commercial real estate	(48)		100		52
Construction and land	73		2		75
Total loans	1,712		1,567		3,279
Investment securities	2		560		562
Cash and cash equivalents	(29)		161		132
Total interest-earning assets	1,685		2,288		3,973
Interest-Bearing Liabilities
Transaction accounts	2		(9)		(7)
Money market demand accounts	101		643		744
Time deposits	(27)		183		156
Total deposits	76		817		893
FHLB advances	468		63		531
Junior subordinated debentures	—		110		110
Senior debt	1		—		1
Total interest-bearing liabilities	545		990		1,535
Net Interest Income	$	1,140	$	1,298	$	2,438

Total interest income increased by $4.0 million, or 7.1%, for the three months ended June 30, 2022 as compared to the prior quarter. This increase was primarily due to a $3.3 million improvement in interest income earned on loans caused by a $202.9 million and 9 basis point increase in the average balance and yield on our loans, respectively. The increase in loan yield was primarily due to lower accelerated loan cost amortization on paid off single family residential ("SFR") loans and higher income earned on an interest rate swap hedging fixed rate SFR loans.

The volume of new loan originations totaled $733.0 million and $568.9 million for the three months ended June 30, 2022 and March 31, 2022, respectively. The weighted average rate on new loans for the three months ended June 30, 2022 was 3.55% as compared to 3.14% for the linked quarter. The increase in the average coupon on originations was primarily due to the rising interest rate environment. Loan prepayment speeds were 24.0% and 26.2% during the three months ended June 30, 2022 and March 31, 2022, respectively. The decrease in prepayment speeds was due to a slowing of SFR prepayments due to rising market interest rates. This decline was partially offset by income property loan ("IPL") prepayment speeds which remained elevated relative to historical levels. Approximately 45% of our prepaid IPL loans during the current quarter were in-house refinances that were in the pipeline at March 31, 2022 and rate locked at low interest rates. These in-house refinances were the primary driver of the higher IPL prepayment speeds during the current quarter. The weighted average rate on loan payoffs/curtailments during the three months ended June 30, 2022 was 3.86% as compared to 3.70% for the prior quarter.

Total interest expense increased $1.5 million, or 14.0%, to $12.5 million, for the three months ended June 30, 2022 from $11.0 million for the prior quarter. Interest expense on deposits increased $893 thousand, to $6.9 million, for the three months ended June 30, 2022 from $6.0 million for the prior quarter. The increase was primarily due to a 5 basis point increase in the cost of interest-bearing deposits predominantly due to an increase in rates offered on our deposit products driven by rising market interest rates. Additionally, interest expense on FHLB advances increased $531 thousand compared to the prior quarter due to an increase in the average balance and cost of advances of $102.6 million and 3 basis points, respectively. We generally use both deposits and FHLB advances to fund net loan growth. We also use long-term FHLB advances as a hedge of interest rate risk, as we can strategically control the duration of those funds. A discussion of instruments used to mitigate interest rate risk can be found under Part II - Item 7A. ‘‘Quantitative and Qualitative Disclosures About Market Risk.’’

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Provision for Loan Losses

During the three months ended June 30, 2022, the Company recorded loan loss provisions of $2.5 million compared to a reversal of loan loss provisions of $2.5 million during the three months ended March 31, 2022. The current quarter provision was related to loan growth and an increase in classified loan balances while the prior quarter reversal related to the remaining portion of qualitative reserves established early in the pandemic that were deemed unnecessary. Our allowance for loan losses as a percentage of total loans was 0.54% at June 30, 2022 compared to 0.52% and 0.56% at March 31, 2022 and December 31, 2021, respectively. The allowance for loan losses and the provisions for loan losses recognized were determined based on the incurred loss methodology. The Company expects to adopt the CECL allowance methodology on January 1, 2023.

Nonperforming assets totaled $5.0 million, or 0.07% of total assets, at June 30, 2022 compared to $2.3 million, or 0.03% of total assets, at December 31, 2021. Criticized loans, which includes loans graded Special Mention and of greater risk, were $27.5 million at June 30, 2022 compared to $16.7 million at December 31, 2021. Classified loans, which includes loans graded Substandard and of greater risk, totaled $22.5 million and $12.1 million at June 30, 2022 and December 31, 2021, respectively. The increase in criticized and classified loan balances was primarily attributed to isolated credit related downgrades of several multifamily residential loans during the six months ended June 30, 2022. The Company's exposure to nonresidential commercial real estate remains limited, totaling $184.7 million, or 2.8% of our loan portfolio, at the end of the current quarter.

Noninterest Income

Noninterest income increased by $304 thousand, or 524.1%, to $362 thousand for the three months ended June 30, 2022 from $58 thousand for the prior quarter. The following table presents the major components of our noninterest income:

	For the Three Months Ended
(Dollars in thousands)	June 30, 2022		March 31, 2022		$ Increase (Decrease)		% Increase (Decrease)
Noninterest Income
FHLB dividends	$	342	$	354	$	(12)	(3.4)	%
Fee income	292		226		66		29.2	%
Other	(272)		(522)		250		(47.9)	%
Total noninterest income	$	362	$	58	$	304	524.1	%

The increase in noninterest income for the quarter ended June 30, 2022 compared to the quarter ended March 31, 2022, was primarily attributable to a $233 thousand decrease in the decline in the fair value of community development investments that are classified as equity securities. Decreases in fair value are primarily attributed to the rise in market interest rates.

Noninterest Expense

Noninterest expense decreased $2.2 million, or 14.1%, to $13.3 million for the three months ended June 30, 2022 from $15.5 million for the three months ended March 31, 2022. The following table presents the major components of our noninterest expense:

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	For the Three Months Ended
(Dollars in thousands)	June 30, 2022		March 31, 2022		$ Increase (Decrease)		% Increase (Decrease)
Noninterest Expense
Compensation and related benefits	$	7,070	$	10,219	$	(3,149)	(30.8)	%
Deposit insurance premium	479		481		(2)		(0.4)	%
Professional and regulatory fees	634		539		95		17.6	%
Occupancy	1,197		1,194		3		0.3	%
Depreciation and amortization	746		603		143		23.7	%
Data processing	1,007		988		19		1.9	%
Marketing	525		458		67		14.6	%
Other expenses	1,667		1,030		637		61.8	%
Total noninterest expense	$	13,325	$	15,512	$	(2,187)	(14.1)	%

The decrease in noninterest expense during the quarter ended June 30, 2022 compared to the linked quarter was predominantly due to a $3.1 million decrease in compensation costs due to a $1.4 million decline in the required accrual for post-employment related retirement benefits resulting from an increase in interest rates. Compensation costs were further improved by a $1.2 million increase in capitalized loan origination costs due to stronger loan volume, as well as lower payroll taxes as compared to the first quarter of the year. These expense reductions were partially offset by other expenses, which increased $637 thousand during the current quarter primarily due to an increase in down payment assistance costs associated with our program to support home ownership for low-to-moderate income borrowers.

Income Tax Expense

For the three months ended June 30, 2022, we recorded income tax expense of $9.4 million as compared to $9.1 million for the prior quarter with effective tax rates of 29.5% and 28.5%, respectively. The effective tax rate in the linked quarter benefited from the vesting of restricted stock which typically occurs during the first calendar quarter of each year.

Results of Operations - Six Months Ended June 30, 2022 and 2021

Overview

For the six months ended June 30, 2022, our net income was $45.5 million as compared to $39.6 million for the six months ended June 30, 2021. The increase of $5.9 million, or 14.8%, was primarily attributable to an increase of $12.9 million in net interest income, partially offset by an increase of $5.0 million in the provision for loan losses and an increase of $2.1 million in the provision for income taxes as compared to the same period last year. Pre-tax, pre-provision net earnings increased by $12.9 million, or 25.3%, for the six months ended June 30, 2022 as compared to the same period last year.

Net Interest Income

Net interest income increased by $12.9 million, or 16.2%, to $92.5 million for the six months ended June 30, 2022 from $79.6 million for the same period last year primarily due to a decrease in interest expense on deposits related to a decline in the cost of interest-bearing deposits, as well as an increase in interest income on loans primarily due to an improvement in the earnings on our swaps and an increase in the average balance of loans compared to the same period last year, partially offset by the prepayment of higher yielding loans, which were replaced by loans at lower interest rates. Additionally, interest income on investments increased due to an increase in yield and interest expense on FHLB advances declined due to decreases in the average balance and cost of FHLB advances compared to the same period last year. As compared to the prior year, the average balance of our loan portfolio increased by $137.3 million, while the yield on loans did not change and the the average balance and yield on investments increased $18.3 million and 30 basis points, respectively. The average balance and cost of interest bearing deposits increased $167.2 million and decreased 34 basis points, respectively, and the average balance and cost of FHLB advances decreased by $87.4 million and 7 basis points, respectively, as compared to the same period last year.

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Net interest margin for the six months ended June 30, 2022 was 2.58% compared to 2.27% for the same period last year. The increase in our margin was primarily related to a 31 basis point decline in the cost of our interest-bearing liabilities.

Average balance sheet, interest and yield/rate analysis. The following table presents average balance sheet information, interest income, interest expense and the corresponding average yield earned and rates paid for the six months ended June 30, 2022 and 2021. The average balances are daily averages.

	For the Six Months Ended June 30,
	2022						2021
(Dollars in thousands)	Average Balance		Interest Inc/Exp		Yield/Rate		Average Balance		Interest Inc/Exp		Yield/Rate
Interest-Earning Assets
Multifamily residential	$	4,265,584	$	79,038	3.71	%	$	4,155,475	$	75,501	3.63	%
Single family residential	1,914,875		26,456		2.76	%	1,880,852		27,573		2.93	%
Commercial real estate	191,776		4,460		4.65	%	200,220		4,537		4.53	%
Construction and land	23,077		591		5.16	%	21,455		638		6.00	%
Total loans (1)	6,395,312		110,545		3.46	%	6,258,002		108,249		3.46	%
Investment securities	650,304		5,163		1.59	%	632,014		4,074		1.29	%
Cash, cash equivalents and restricted cash	127,479		265		0.42	%	124,494		84		0.14	%
Total interest-earning assets	7,173,095		115,973		3.23	%	7,014,510		112,407		3.20	%
Noninterest-earning assets (2)	101,204						62,164
Total assets	$	7,274,299					$	7,076,674
Interest-Bearing Liabilities
Transaction accounts	$	172,351	183		0.21	%	$	153,638	171		0.22	%
Money market demand accounts	3,007,908		7,189		0.48	%	2,127,491		5,690		0.53	%
Time deposits	2,213,867		5,561		0.50	%	2,945,807		15,494		1.05	%
Total deposits	5,394,126		12,933		0.48	%	5,226,936		21,355		0.82	%
FHLB advances	812,685		6,725		1.67	%	900,107		7,772		1.74	%
Junior subordinated debentures	61,857		660		2.15	%	61,857		514		1.68	%
Senior debt	94,688		3,149		6.65	%	94,565		3,148		6.66	%
Total interest-bearing liabilities	6,363,356		23,467		0.74	%	6,283,465		32,789		1.05	%
Noninterest-bearing deposit accounts	156,717						100,133
Other noninterest-bearing liabilities	80,196						63,135
Total liabilities	6,600,269						6,446,733
Total stockholders' equity	674,030						629,941
Total liabilities and stockholders' equity	$	7,274,299					$	7,076,674
Net interest spread (3)					2.49	%					2.15	%
Net interest income/margin (4)			$	92,506	2.58	%			$	79,618	2.27	%

(1)     Non-accrual loans and loans held for sale are included in total loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of deferred loan costs, net of deferred loan fees. Net deferred loan cost amortization totaled $8.8 million and $9.8 million for the six months ended June 30, 2022 and 2021, respectively.

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

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

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

Interest rates and operating interest differential. The following table shows the effect that changes in volume and average interest rates had on the interest earned from our interest-earning assets and interest incurred on our

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interest-bearing liabilities during the periods indicated.

	Six Months Ended June 30, 2022 vs 2021
	Variance Due To
(Dollars in thousands)	Volume		Yield/Rate		Total
Interest-Earning Assets
Multifamily residential	$	1,931	$	1,606	$	3,537
Single family residential	494		(1,611)		(1,117)
Commercial real estate	(195)		118		(77)
Construction and land	47		(94)		(47)
Total loans	2,277		19		2,296
Investment securities	121		968		1,089
Cash, cash equivalents and restricted cash	2		179		181
Total interest-earning assets	2,400		1,166		3,566
Interest-Bearing Liabilities
Transaction accounts	20		(8)		12
Money market demand accounts	2,087		(588)		1,499
Time deposits	(3,204)		(6,729)		(9,933)
Total deposits	(1,097)		(7,325)		(8,422)
FHLB advances	(740)		(307)		(1,047)
Junior subordinated debentures	—		146		146
Senior debt	5		(4)		1
Total interest-bearing liabilities	(1,832)		(7,490)		(9,322)
Net Interest Income	$	4,232	$	8,656	$	12,888

Total interest income increased by $3.6 million, or 3.2%, for the six months ended June 30, 2022 as compared to the same period last year. The increase was primarily due to a $2.3 million improvement in interest income earned on loans resulting predominantly from a $7.1 million improvement in the earnings on our swaps, partially offset by the prepayment of higher yielding loans, which were replaced by loans at lower interest rates. Additionally, interest income on investments increased $1.1 million primarily due to a 30 basis increase in yield compared to the same period last year due to rising market interest rates.

The volume of new loans originated totaled $1.3 billion and $1.1 billion for the six months ended June 30, 2022 and 2021, respectively. The weighted average interest rate on new loans for the six months ended June 30, 2022 was 3.37% as compared to 3.34% for the same period last year. During the six months ended June 30, 2021, we purchased a pool of single family loans, which was a strategic response to continued elevated loan prepayments. This purchase is excluded from the total volume of new loans originated discussed above. Loan prepayment speeds were 25.1% and 26.5% during the six months ended June 30, 2022 and 2021, respectively. The weighted average rate on loan payoffs/curtailments during the six months ended June 30, 2022 was 3.78% as compared to 4.00% for the same period last year.

Total interest expense decreased $9.3 million, or 28.4%, to $23.5 million for the six months ended June 30, 2022 from $32.8 million for the same period last year. Interest expense on deposits decreased $8.4 million primarily due to the cost of interest-bearing deposits decreasing 34 basis points. The decrease in our cost of interest-bearing deposits compared to the same period last year was predominantly due to the maturity of time deposits during the second half of 2021 that repriced to lower interest rates at that time and, to a lesser extent, a $731.9 million decrease in the average balance of time deposits, which were generally replaced with other lower cost deposit products. Interest expense on advances from the FHLB decreased by $1.0 million during the six months ended June 30, 2022 compared to the same period last year, due to a decrease in the average balance and cost of FHLB advances of $87.4 million and 7 basis points, respectively. A discussion of instruments used to mitigate interest rate risk can be found under Part II - Item 7A. ‘‘Quantitative and Qualitative Disclosures About Market Risk.’’

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Provision for Loan Losses

For the six months ended June 30, 2022, we recorded no loan loss provisions, on a net basis, as compared to recording a reversal of loan loss provisions of $5.0 million for the same period last year. During the six months ended June 30, 2022, loan loss provisions recorded in the second quarter were primarily due to loan growth and an increase in classified loan balances. These loan loss provisions were entirely offset by a reversal of loan loss provisions recorded in the first quarter related to the remaining portion of qualitative reserves for uncertain economic risks established early in the pandemic that were deemed unnecessary. The loan loss provisions reversed during the six months ended June 30, 2021 were predominantly due to the reversal of a portion of our pandemic related qualitative reserves, as well as an improvement in the level of our criticized loans during that period.

Noninterest Income

Noninterest income decreased by $399 thousand, or 48.7%, to $420 thousand for the six months ended June 30, 2022 from $819 thousand for the same period last year.

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

	For the Six Months Ended June 30,
(Dollars in thousands)	2022		2021		$ Increase (Decrease)		% Increase (Decrease)
Noninterest Income
FHLB dividends	$	696	$	738	$	(42)	(5.7)	%
Fee income	517		131		386		294.7	%
Other	(793)		(50)		(743)		1486.0	%
Total noninterest income	$	420	$	819	$	(399)	(48.7)	%

The decrease in noninterest income for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily due to a $743 thousand net decrease in the fair value of equity securities during the current period compared to the same period last year, partially offset by a $386 increase in fee income primarily related to deposit accounts.

Noninterest Expense

Noninterest expense decreased $447 thousand, or 1.5%, to $28.8 million for the six months ended June 30, 2022 from $29.3 million for the same period last year.

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

	For the Six Months Ended June 30,
(Dollars in thousands)	2022		2021		$ Increase (Decrease)		% Increase (Decrease)
Noninterest Expense
Compensation and related benefits	$	17,289	$	19,021	$	(1,732)	(9.1)	%
Deposit insurance premium	960		939		21		2.2	%
Occupancy	2,391		2,472		(81)		(3.3)	%
Depreciation and amortization	1,349		1,333		16		1.2	%
Professional and regulatory fees	1,173		1,098		75		6.8	%
Marketing	983		527		456		86.5	%
Data processing	1,995		1,846		149		8.1	%
Other expenses	2,697		2,048		649		31.7	%
Total noninterest expense	$	28,837	$	29,284	$	(447)	(1.5)	%

The decrease in noninterest expense during the six months ended June 30, 2022 as compared to the same period last year was primarily attributable to a $1.7 million decline in compensation costs mainly due to an increase in

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capitalized salaries related to increased loan production volumes compared to the same period last year. This decrease was partially offset by a $649 thousand increase in other expenses primarily related to an increase in down payment assistance costs associated with our program to support home ownership for low-to-moderate income borrowers, as well as a $456 thousand increase in marketing costs attributed to deposit gathering efforts.

Income Tax Expense

For the six months ended June 30, 2022, we recorded income tax expense of $18.6 million as compared to $16.5 million for the same period last year with effective tax rates of 29.0% and 29.4%, respectively. Compared to the same period last year, the increase in income tax expense was primarily due to our higher pre-tax earnings during the six months ended June 30, 2022.

Financial Condition - As of June 30, 2022 and December 31, 2021

Total assets at June 30, 2022 were $7.5 billion, an increase of $350.6 million, or 4.9%, from December 31, 2021. The increase was primarily due to a $340.4 million increase in loans and a $44.6 million increase in prepaid expenses and other assets, partially offset by a $51.9 million decline in cash and cash equivalents as compared to December 31, 2021. Total liabilities were $6.9 billion at quarter end, an increase of $348.1 million, or 5.3%, from December 31, 2021. The increase in total liabilities was primarily attributable to a $203.3 million increase in FHLB advances and growth of $130.5 million in our deposits.

Loan Portfolio Composition

Our loan portfolio is our largest class of earning assets and typically provides higher yields than other types of earning assets. Associated with the higher yields is an inherent amount of credit risk which we attempt to mitigate with strong underwriting. As of June 30, 2022 and December 31, 2021, our total loans amounted to $6.6 billion and $6.3 billion, respectively. The following table presents the balance and associated percentage of each major product type within our portfolio as of the dates indicated.

	As of June 30, 2022				As of December 31, 2021
(Dollars in thousands)	Amount		% of total		Amount		% of total
Real estate loans
Multifamily residential	$	4,384,357	66.6	%	$	4,183,194	66.9	%
Single family residential	1,986,236		30.2	%	1,859,524		29.8	%
Commercial real estate	184,115		2.8	%	186,531		3.0	%
Construction and land	27,265		0.4	%	18,094		0.3	%
Total loans before deferred items	6,581,973		100.0	%	6,247,343		100.0	%
Deferred loan costs, net	55,856				50,077
Total loans	$	6,637,829			$	6,297,420

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

We recognize that our multifamily and single family residential loan products represent concentrations within our balance sheet. Multifamily loan balances as a percentage of risk-based capital were 560% and 551% as of June 30, 2022 and December 31, 2021, respectively. Our single family loans as a percentage of risk-based capital were 255% and 246% as of the same dates. Additionally, our loans are geographically concentrated with borrowers and collateral properties on the West Coast. At June 30, 2022, 62%, 27% and 9% of our real estate loans were collateralized by properties in southern California counties, northern California counties and Washington, respectively, compared to 63%, 26% and 9%, respectively, at December 31, 2021.

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

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We had a small portfolio of construction loans with commitments (funded and unfunded) totaling $42.3 million and $38.1 million at June 30, 2022 and December 31, 2021, respectively. As of June 30, 2022, the average loan commitment for our single family construction product, which includes small tract housing and condominium projects, and our multifamily residential construction loans was $6.0 million and $6.1 million, respectively, compared to $5.1 million and $6.4 million, respectively, at December 31, 2021. Our construction lending typically focuses on non-owner occupied single family residential projects with completed per-unit values of $4.0 million or less and multifamily projects with loan commitments of $15.0 million or less.

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

	Three Months Ended				Six Months Ended
(Dollars in thousands)	June 30, 2022		March 31, 2022		June 30, 2022		June 30, 2021
Loan increases:
Multifamily residential	$	495,594	$	297,128	$	792,721	$	710,250
Single family residential	231,383		251,964		483,347		388,973
Commercial real estate	5,990		14,420		20,410		2,000
Construction and land	—		5,400		5,400		19,200
Purchases	—		—		—		287,751
Total loans originated and purchased	732,967		568,912		1,301,878		1,408,174
Loan decreases:
Loan principal reductions and payoffs	(462,112)		(495,715)		(957,827)		(996,823)
Other (1)	657		(4,299)		(3,642)		(17,527)
Total loan outflows	(461,455)		(500,014)		(961,469)		(1,014,350)
Net change in total loan portfolio	$	271,512	$	68,898	$	340,409	$	393,824
(1) Other changes in loan balances primarily represent the net change in disbursements on unfunded commitments, deferred loan costs, fair value adjustments and, to the extent applicable, may include foreclosures and charge-offs.

Multifamily residential loans. We provide multifamily residential loans for the purchase or refinance of apartment buildings of five units or more, with the financed properties serving as collateral for the loan. Our multifamily lending is built around three core principles: market selection, deal selection and sponsor selection. We focus on markets with a high barrier to entry for new development, where there is a limited supply of new housing and where there is a high variance between the cost to rent and the cost to own. We typically lend on stabilized and seasoned assets and focus on older, smaller properties with rents at or below market levels, catering to low and middle income renters. Our customers are generally experienced real estate professionals who desire regular income/cash flow streams and are focused on building wealth steadily over time. We have instituted strong lending policies to mitigate credit and concentration risk. At June 30, 2022, our multifamily real estate portfolio had an average loan balance of $1.7 million, an average unit count of 13.8 units, a weighted average loan to value of 57.1% and a weighted average debt service coverage ratio of 1.5 times, as compared to an average loan balance of $1.6 million, an average unit count of 14.0 units, a weighted average loan to value of 56.9% and a weighted average debt service coverage ratio of 1.5 times at December 31, 2021.

Single family residential loans. We provide permanent financing on single family residential properties primarily located in our market areas, which are both owner-occupied and investor owned. We conduct this business primarily through a network of third party mortgage brokers with the intention of retaining these loans in our portfolio. The majority of our originations are for purchase transactions, but we also provide loans to refinance single family properties. Our underwriting criteria focuses on debt ratios, credit scores, liquidity of the borrower and the borrower’s cash reserves. At June 30, 2022, our single family residential real estate portfolio had an average loan balance of $882 thousand, a weighted average loan to value of 63.3% and a weighted average credit score at origination/refreshed of 761. At December 31, 2021, our single family residential real estate portfolio had an average loan balance of $859 thousand, a weighted average loan to value of 62.5% and a weighted average credit score at origination/refreshed of 759.

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Commercial real estate loans. While not a large part of our portfolio during any period presented, we also lend on nonresidential commercial real estate. Our commercial real estate loans are generally used to finance the purchase or refinance of established multi-tenant industrial, office and retail sites. At June 30, 2022, our commercial real estate portfolio had an average loan balance of $2.2 million, a weighted average loan to value of 53.6% and a weighted average debt service coverage ratio of 1.7 times, as compared to an average loan balance of $2.1 million, a weighted average loan to value of 54.2% and a weighted average debt service coverage ratio of 1.7 times at December 31, 2021.

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

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

(Dollars in thousands)	Due in 1 year or less		Due after 1 year through 5 years		Due after 5 years through 15 years		Due after 15 years		Total
As of June 30, 2022:
Loans
Real estate mortgage loans:
Multifamily residential	$	17	$	772	$	38,793	$	4,344,775	$	4,384,357
Single family residential	6		618		54,723		1,930,889		1,986,236
Commercial real estate	—		19,164		164,951		—		184,115
Construction and land	15,464		11,801		—		—		27,265
Total loans	$	15,487	$	32,355	$	258,467	$	6,275,664	$	6,581,973
Fixed interest rates	$	—	$	199	$	47,139	$	263,980	$	311,318
Floating or hybrid adjustable rates	15,487		32,156		211,328		6,011,684		6,270,655
Total loans	$	15,487	$	32,355	$	258,467	$	6,275,664	$	6,581,973
As of December 31, 2021:
Loans
Real estate mortgage loans:
Multifamily residential	$	30	$	2,225	$	37,730	$	4,143,209	$	4,183,194
Single family residential	27		631		56,858		1,802,008		1,859,524
Commercial real estate	—		11,403		175,128		—		186,531
Construction and land	10,648		7,446		—		—		18,094
Total loans	$	10,705	$	21,705	$	269,716	$	5,945,217	$	6,247,343
Fixed interest rates	$	—	$	201	$	49,385	$	240,337	$	289,923
Floating or hybrid adjustable rates	10,705		21,504		220,331		5,704,880		5,957,420
Total loans	$	10,705	$	21,705	$	269,716	$	5,945,217	$	6,247,343

Our fixed interest rate loans generally consist of 30 and 40-year loans that are primarily secured by single family residential properties, often in conjunction with our efforts to provide affordable housing financing to low-to-moderate income individuals. Our floating and adjustable rate loans are largely hybrid interest rate programs that provide an initial fixed term of three to ten years and then convert to quarterly or semi-annual repricing adjustments thereafter. As of June 30, 2022 and December 31, 2021, $5.1 billion and $4.8 billion, respectively, of our floating or hybrid adjustable rate loans were at their floor rates. The weighted average minimum interest rate on loans at their floor rates was 3.64% and 3.75% at June 30, 2022 and December 31, 2021, respectively. Hybrid adjustable rate loans still within their initial fixed term totaled $5.5 billion and $5.1 billion at June 30, 2022 and December 31, 2021, respectively. These loans had a weighted average term to first repricing date of 3.8 years and 3.6 years at June 30, 2022 and December 31, 2021, respectively.

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Asset Quality

Our primary objective is to maintain a high level of asset quality in our loan portfolio. We believe our underwriting practices and policies, established by experienced professionals, appropriately govern the risk profile for our loan portfolio. These policies are continually evaluated and updated as necessary. All loans are assessed and assigned a risk classification at origination based on underlying characteristics of the transaction such as collateral type, collateral cash flow, collateral coverage and borrower strength. We believe that we have a comprehensive methodology to proactively monitor our credit quality after origination. Particular emphasis is placed on our commercial portfolio where risk assessments are re-evaluated as a result of reviewing commercial property operating statements and borrower financials on at least an annual basis. Single family residential loans are subject to an annual regrading based upon a credit score refresh, among other factors. On an ongoing basis, we also monitor payment performance, delinquencies, and tax and property insurance compliance, as well as any other pertinent information that may be available to determine the collectability of a loan. We believe our practices facilitate the early detection and remediation of problems within our loan portfolio. Assigned risk ratings, as well as the evaluation of other credit metrics, are an integral part of management assessing the adequacy of our allowance for loan losses. We periodically employ the use of an outside independent consulting firm to evaluate our underwriting and risk assessment processes. Like other financial institutions, we are subject to the risk that our loan portfolio will be exposed to increasing pressures from deteriorating borrower credit due to general economic conditions.

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

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

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

(Dollars in thousands)	June 30, 2022			December 31, 2021
Non-accrual loans
Multifamily residential portfolio	$	852		$	505
Single family residential portfolio	4,178			1,788
Total non-accrual loans	5,030			2,293
Real estate owned	—			—
Total nonperforming assets	$	5,030		$	2,293
Performing TDRs	$	1,179		$	1,204
Allowance for loan losses to period end nonperforming loans	706.46		%	1,549.72		%
Nonperforming loans to period end loans	0.08		%	0.04		%
Nonperforming assets to total assets	0.07		%	0.03		%
Nonperforming loans plus performing TDRs to total loans	0.09		%	0.06		%

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

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Interest income recognized on non-accrual loans subsequent to their classification as non-accrual totaled $27 thousand for both the three months ended June 30, 2022 and March 31, 2022 and $54 thousand and $99 thousand for the six months ended June 30, 2022 and 2021, respectively. The Company recorded interest income related to performing TDR loans of $10 thousand and $9 thousand for the three months ended June 30, 2022 and March 31, 2022, respectively, and $19 thousand and $39 thousand for the six months ended June 30, 2022 and 2021, respectively. Gross interest income that would have been recorded on non-accrual loans had they been current in accordance with their original terms was $44 thousand and $27 thousand for the three months ended June 30, 2022 and March 31, 2022, respectively, and $71 thousand and $115 thousand for the six months ended June 30, 2022 and 2021, respectively.

Allowance for loan losses. Our allowance for loan losses is maintained at a level management believes is adequate to account for probable incurred credit losses in the loan portfolio as of the reporting date. We determine the allowance based on a quarterly evaluation of risk. That evaluation gives consideration to the nature of the loan portfolio, historical loss experience, known and inherent risks in the portfolio, the estimated value of any underlying collateral, adverse situations that may affect a borrower’s ability to repay, current economic and environmental conditions and risk assessments assigned to each loan as a result of our ongoing reviews of the loan portfolio. This process involves a considerable degree of judgment and subjectivity. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance. Such agencies may require the Bank to recognize additions to the allowance based on judgments different from those of management.

Our allowance is established through charges to the provision for loan losses. Loans, or portions of loans, deemed to be uncollectible are charged against the allowance. Recoveries of previously charged-off amounts are credited to our allowance for loan losses. The allowance is decreased by the reversal of prior provisions when the total allowance balance is deemed excessive for the risks inherent in the portfolio. The allowance for loan losses balance is neither indicative of the specific amounts of future charge-offs that may occur, nor is it an indicator of any future loss trends.

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

	Three Months Ended						Six Months Ended
(Dollars in thousands)	June 30, 2022			March 31, 2022			June 30, 2022			June 30, 2021
Allowance for loan losses at beginning of period	$	33,035		$	35,535		$	35,535		$	46,214
Charge-offs:
Multifamily residential	—			—			—			—
Single family residential	—			—			—			—
Commercial real estate	—			—			—			—
Construction and land	—			—			—			—
Total charge-offs	—			—			—			—
Recoveries:
Single family residential	—			—			—			64
Construction and land	—			—			—			57
Total recoveries	—			—			—			121
Net recoveries	—			—			—			121
Provision for (reversal of) loan losses	2,500			(2,500)			—			(5,000)
Allowance for loan losses at period end	$	35,535		$	33,035		$	35,535		$	41,335
Allowance for loan losses to period end loans held for investment	0.54		%	0.52		%	0.54		%	0.64		%
Annualized net recoveries to average loans:
Multifamily residential	—		%	—		%	—		%	—		%
Single family residential	—		%	—		%	—		%	(0.01)		%
Commercial real estate	—		%	—		%	—		%	—		%
Construction and land	—		%	—		%	—		%	(0.53)		%
Annualized net recoveries to average loans	—		%	—		%	—		%	(0.00)		%

Investment Portfolio

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

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

	June 30, 2022				December 31, 2021
(Dollars in thousands)	Book Value		% of Total		Book Value		% of Total
Available for sale debt securities:
Government and Government Sponsored Entities:
Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")	$	401,175	59.40	%	$	407,746	61.52	%
Residential MBS and CMOs	208,432		30.87	%	200,133		30.19	%
Agency bonds	25,801		3.82	%	10,831		1.63	%
Other asset backed securities	26,024		3.85	%	28,607		4.32	%
Total available for sale debt securities	661,432		97.94	%	647,317		97.66	%
Held to maturity:
Government Sponsored Entities:
Residential MBS	3,097		0.46	%	3,761		0.57	%
Other investments	65		0.01	%	68		0.01	%
Total held to maturity debt securities	3,162		0.47	%	3,829		0.58	%
Equity securities	10,772		1.59	%	11,693		1.76	%
Total investment securities	$	675,366	100.00	%	$	662,839	100.00	%

Deposits

Representing 82.6% of our total liabilities as of June 30, 2022, deposits are our primary source of funding for our business operations. We have historically maintained and grown our deposit customer base in various rate environments based on our strong customer relationships, evidenced in part by increased deposits over recent years, as well as our reputation as a safe, sound, secure and "well-capitalized" institution and our commitment to excellent customer service. We are focused on growing our deposits by deepening our relationships with our existing loan and deposit customers and looking to expand our traditional product footprint with newer emphasis placed on specialty/business affiliations and transaction accounts. When competitively priced and/or for asset liability management purposes, we will supplement our deposits with wholesale deposits.

Total deposits increased by $130.5 million, or 2.4%, to $5.7 billion at June 30, 2022 from $5.5 billion at December 31, 2021. Brokered and retail deposits increased $97.3 million and $33.2 million, respectively, during the six months ended June 30, 2022. The increase in deposits was generally utilized to support loan growth. As of June 30, 2022, the proportion of non-maturity deposits within the portfolio increased to 60.5% compared to 57.8% at December 31, 2021, while our portfolio of time deposits decreased to 39.5% from 42.2%, respectively. The change in the composition of our deposit portfolio was attributed to a combination of consumer preferences to maintain flexibility in the current changing interest rate environment, as well as our strategic goal of increasing transaction accounts. Our cost of interest bearing deposits was 0.50% and 0.45% during the quarter ended June 30, 2022 and March 31, 2022, respectively, and 0.48% and 0.82% during the six months ended June 30, 2022 and 2021, respectively. The increase in our cost of interest bearing deposits compared to the prior quarter was predominantly due to an increase in rates offered on our deposit products driven by rising market interest rates. The decrease during the six months ended June 30, 2022 compared to the same period last year was predominantly due to the maturity of time deposits during the second half of 2021 that repriced to lower interest rates at that time and, to a lesser extent, a decrease in the average balance of time deposits, which were generally replaced with other lower cost deposit products.

Our loan to deposit ratio was 117% and 114% at June 30, 2022 and December 31, 2021, respectively. It is common for us to operate with a loan to deposit ratio exceeding those commonly seen at other banks. Our higher than average ratio is attributed to our use of FHLB borrowings to supplement loan growth and to strategically manage our interest rate risk, as well as our preference to maintain a large proportion of our assets in real estate loans which generally provide a better yield than high-quality liquid investments.

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

	Three Months Ended
	June 30, 2022						March 31, 2022
(Dollars in thousands)	Average amount		Weighted average rate paid		Percent of total deposits		Average amount		Weighted average rate paid		Percent of total deposits
Noninterest-bearing deposit accounts	$	165,799	—	%	3.0	%	$	147,533	—	%	2.7	%
Interest-bearing transaction accounts	175,092		0.20	%	3.1	%	169,580		0.22	%	3.1	%
Money market demand accounts	3,050,811		0.51	%	54.6	%	2,964,527		0.43	%	53.8	%
Time deposits	2,196,455		0.51	%	39.3	%	2,231,471		0.49	%	40.4	%
Total	$	5,588,157	0.49	%	100.0	%	$	5,513,111	0.44	%	100.0	%

	Six Months Ended
	June 30, 2022						June 30, 2021
(Dollars in thousands)	Average amount		Weighted average rate paid		Percent of total deposits		Average amount		Weighted average rate paid		Percent of total deposits
Noninterest-bearing deposit accounts	$	156,717	—	%	2.8	%	$	100,133	—	%	1.9	%
Interest-bearing transaction accounts	172,351		0.21	%	3.1	%	153,638		0.22	%	2.9	%
Money market demand accounts	3,007,908		0.48	%	54.2	%	2,127,491		0.53	%	39.9	%
Time deposits	2,213,867		0.50	%	39.9	%	2,945,807		1.05	%	55.3	%
Total	$	5,550,843	0.46	%	100.0	%	$	5,327,069	0.80	%	100.0	%

The following table sets forth the maturity of time deposits as of June 30, 2022:

(Dollars in thousands except for column headings)	Insured			Uninsured
Remaining maturity:
Three months or less	$	650,209		$	221,819
Over three through six months	314,796			169,059
Over six through twelve months	452,528			95,642
Over twelve months	276,646			59,696
Total	$	1,694,179		$	546,216
Percent of total deposits	29.89		%	9.64		%

The Company estimated its balance of uninsured deposits at approximately $1.4 billion at both June 30, 2022 and December 31, 2021. At the same dates, the Company had $123.1 million and $25.8 million of wholesale deposits, respectively.

FHLB Advances and Other Borrowings

In addition to deposits, we utilize collateralized FHLB borrowings to fund our asset growth. FHLB advances can, at times, have attractive rates and we have commonly used them to strategically extend the duration of our liabilities as part of our interest rate risk management. Total FHLB advances totaled $954.9 million and $751.6 million at June 30, 2022 and December 31, 2021, respectively. As of the same dates, the Bank had a FHLB letter of credit outstanding totaling $62.6 million.

Historically, we have utilized other instruments such as trust preferred securities and senior debt at the bank holding company level as a source of capital for our Bank to support asset growth. We have established two trusts (the "Trusts") of which we own all the common securities, that have issued trust preferred securities, ("Trust Securities"), to investors in private placement transactions. The proceeds of the securities qualify as Tier 1 capital under the applicable regulations for community banks with total assets less than $15 billion. In accordance with GAAP, the

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Trusts are not consolidated in our consolidated statements of financial condition but rather, the common securities are included in our other assets and the junior subordinated debentures ("Notes") issued to the Trusts are shown as a liability. The following table is a summary of our outstanding Trust Securities and related Notes as of the dates indicated:

	June 30, 2022				December 31, 2021				Date	Maturity	Rate Index
Issuer	Amount		Rate		Amount		Rate		Issued	Date	(Quarterly Reset)
(Dollars in thousands)
Luther Burbank Statutory Trust I	$	41,238	3.21	%	$	41,238	1.58	%	3/1/2006	6/15/2036	3 month LIBOR + 1.38%
Luther Burbank Statutory Trust II	$	20,619	3.45	%	$	20,619	1.82	%	3/1/2007	6/15/2037	3 month LIBOR + 1.62%

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

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

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

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

	As of or For the Three Months Ended						As of or For the Six Months Ended
(Dollars in thousands)	June 30, 2022			March 31, 2022			June 30, 2022			June 30, 2021
FHLB advances
Average amount outstanding during the period	$	863,685		$	761,119		$	812,685		$	900,107
Maximum amount outstanding at any month-end during the period	954,947			751,647			954,947			1,048,647
Balance outstanding at end of period	954,947			751,647			954,947			1,005,147
Weighted average maturity (in years)	1.7			2.3			1.7			1.3
Weighted average interest rate at end of period	1.79		%	1.75		%	1.79		%	1.45		%
Weighted average interest rate during the period	1.68		%	1.65		%	1.67		%	1.74		%
Junior subordinated deferrable interest debentures
Balance outstanding at end of period	$	61,857		$	61,857		$	61,857		$	61,857
Weighted average maturity (in years)	14.5			14.8			14.5			15.5
Weighted average interest rate at end of period	3.29		%	2.29		%	3.29		%	1.58		%
Weighted average interest rate during the period	2.50		%	1.80		%	2.15		%	1.68		%
Senior unsecured term notes
Balance outstanding at end of period	$	94,724		$	94,693		$	94,724		$	94,601
Weighted average maturity (in years)	2.3			2.4			2.3			3.3
Weighted average interest rate at end of period	6.65		%	6.65		%	6.65		%	6.66		%
Weighted average interest rate during the period	6.65		%	6.65		%	6.65		%	6.66		%

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

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

	As of or For the Three Months Ended						As of or For the Six Months Ended
(Dollars in thousands)	June 30, 2022			March 31, 2022			June 30, 2022			June 30, 2021
Outstanding at period end	$	153,300		$	—		$	153,300		$	228,400
Average amount outstanding	95,003			21,694			58,551			165,873
Maximum amount outstanding at any month end	153,300			—			153,300			346,900
Weighted average interest rate:
During period	1.05		%	0.34		%	0.92		%	0.14		%
End of period	1.70		%	—		%	1.70		%	0.14		%

Stockholders’ Equity

Stockholders’ equity totaled $671.6 million at June 30, 2022, an increase of $2.5 million, or 0.4%, compared to December 31, 2021. The increase in stockholders' equity was primarily due to net income of $45.5 million, partially offset by a decline in the fair value of available for sale investment securities, net of tax, of $21.4 million, dividends paid of $12.4 million and stock repurchases of $9.7 million during the six months ended June 30, 2022.

During the six months ended June 30, 2022, the Company repurchased 732 thousand of its shares at an average

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price of $13.30 per share and a total cost of $9.7 million in connection with its current $20.0 million stock repurchase plan that was approved by the Board of Directors of the Company on October 30, 2020. The plan was completed during the current quarter. Throughout the plan, the Company repurchased a total of 1.6 million shares at an average price of $12.17.

Off-Balance Sheet Arrangements

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

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

(Dollars in thousands)	June 30, 2022		December 31, 2021
Commitments to fund loans and lines of credit	$	162,734	$	132,769

In connection with our Freddie Mac multifamily loan securitization, we entered into a reimbursement agreement pursuant to which we may be required to reimburse Freddie Mac for the first losses in the underlying loan portfolio, not to exceed 10% of the unpaid principal amount at settlement, or approximately $62.6 million. A $62.6 million letter of credit with the FHLB is pledged as collateral in connection with this reimbursement agreement. We have recorded a reserve for estimated losses with respect to the reimbursement obligation of $542 thousand and $727 thousand at June 30, 2022 and December 31, 2021, respectively, which is included in other liabilities and accrued expenses in the consolidated statements of financial condition.

During the six months ended June 30, 2022, the Company entered into three new interest rate swap agreements with an aggregate notional amount of $300 million. The swaps provide a hedge against the interest rate risk associated with hybrid adjustable loans in their fixed rate period. As of June 30, 2022, the Company held swaps with an aggregate notional amount of $950 million. Our swaps involve the payment of a fixed rate amount to a counterparty in exchange for the Company receiving a variable rate payment over the life of the swaps without the exchange of the underlying notional amounts.

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

Contractual Obligations

The following table presents, as of June 30, 2022, our significant contractual obligations to third parties on debt and lease agreements and service obligations. For more information about our contractual obligations, see Part I, Item 1, "Financial Statements and Supplementary Data", Note 16. ‘‘Commitments and Contingencies,’’ in the notes to our unaudited consolidated financial statements in this Report.

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			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)	$	2,240,395	$	1,904,053	$	285,877	$	50,465	$	—
FHLB advances (1)	954,947		303,300		551,500		100,000		147
Senior debt (1)	95,000		—		95,000		—		—
Junior subordinated debentures (1)	61,857		—		—		—		61,857
Operating leases	16,507		3,865		6,234		4,797		1,611
Significant contract (2)	6,395		1,658		3,315		1,422		—
Total	$	3,375,101	$	2,212,876	$	941,926	$	156,684	$	63,615
(1) Amounts exclude interest.
(2) We have one significant, long-term contract for core processing services which expires May 9, 2026. The actual obligation is unknown and dependent on certain factors including volume and activities. For purposes of this disclosure, future obligations are estimated using our year-to-date 2022 average monthly expense extrapolated over the remaining life of the contract.

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

Liquidity Management and Capital Adequacy

Liquidity Management

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

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

Our liquidity position is supported by management of our liquid assets and liabilities and access to alternative sources of funds. Our liquidity requirements are met primarily through our deposits, FHLB advances and the principal and interest payments we receive on loans and investment securities. Cash on hand, unrestricted cash at third party banks, investments available for sale and maturing or prepaying balances in our investment and loan portfolios are our most liquid assets. Other sources of liquidity that are routinely available to us include funds from retail and wholesale deposits, advances from the FHLB and proceeds from the sale of loans. Less commonly used sources of funding include borrowings from the FRB discount window, draws on established federal funds lines from unaffiliated commercial banks and the issuance of debt or equity securities. We believe we have ample liquidity

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resources to fund future growth and meet other cash needs as necessary.

Our total deposits at June 30, 2022 and December 31, 2021 were $5.7 billion and $5.5 billion, respectively. Based on the values of loans pledged as collateral, our $954.9 million of FHLB advances outstanding and our $62.6 million FHLB letter of credit outstanding, we had $897.8 million of additional borrowing capacity with the FHLB at June 30, 2022. Based on the values of other loans pledged as collateral, we had $202.9 million of borrowing capacity with the FRB at June 30, 2022. There were no outstanding advances with the FRB at June 30, 2022. In addition to the liquidity provided by the FHLB and FRB described above, we have established federal funds lines of credit with unaffiliated banks totaling $50.0 million at June 30, 2022, none of which were advanced at that date. In the ordinary course of business, we maintain correspondent bank accounts with unaffiliated banks which are used for normal business activity including ordering cash for our branch network, the purchase of investment securities and the receipt of principal and interest on those investments. Available cash balances at correspondent banks, including amounts at the FRB, totaled $86.5 million at June 30, 2022.

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

Capital Adequacy

We are subject to various regulatory capital requirements administered by federal and state banking regulators. Our capital management consists of providing equity to support our current operations and future growth. Failure to meet minimum regulatory capital requirements may result in mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and off-balance sheet items as calculated under regulatory accounting policies. As of June 30, 2022 and December 31, 2021, we were in compliance with all applicable regulatory capital requirements, including the capital conservation buffer, and the Bank qualified as ‘‘well-capitalized’’ for purposes of the FDIC’s prompt corrective action regulations. At June 30, 2022, the capital conservation buffer was 2.50%.

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

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

					Minimum Required
	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, 2022
Tier 1 Leverage Ratio	$	751,477	10.20	%	$	294,718	4.00	%	N/A		N/A		N/A		N/A
Common Equity Tier 1 Risk-Based Ratio	689,620		16.74	%	185,400		4.50	%	$	288,400	7.00	%	N/A		N/A
Tier 1 Risk-Based Capital Ratio	751,477		18.24	%	247,200		6.00	%	350,200		8.50	%	N/A		N/A
Total Risk-Based Capital Ratio	787,673		19.12	%	329,600		8.00	%	432,600		10.50	%	N/A		N/A
As of December 31, 2021
Tier 1 Leverage Ratio	$	727,606	10.12	%	$	287,509	4.00	%	N/A		N/A		N/A		N/A
Common Equity Tier 1 Risk-Based Ratio	665,749		17.09	%	175,296		4.50	%	$	272,683	7.00	%	N/A		N/A
Tier 1 Risk-Based Capital Ratio	727,606		18.68	%	233,728		6.00	%	331,115		8.50	%	N/A		N/A
Total Risk-Based Capital Ratio	764,048		19.61	%	311,638		8.00	%	409,025		10.50	%	N/A		N/A
Luther Burbank Savings
As of June 30, 2022
Tier 1 Leverage Ratio	$	832,856	11.31	%	$	294,623	4.00	%	N/A		N/A		$	368,279	5.00	%
Common Equity Tier 1 Risk-Based Ratio	832,856		20.23	%	185,307		4.50	%	$	288,255	7.00	%	267,665		6.50	%
Tier 1 Risk-Based Capital Ratio	832,856		20.23	%	247,076		6.00	%	350,024		8.50	%	329,434		8.00	%
Total Risk-Based Capital Ratio	869,052		21.10	%	329,434		8.00	%	432,383		10.50	%	411,793		10.00	%
As of December 31, 2021
Tier 1 Leverage Ratio	$	799,457	11.13	%	$	287,407	4.00	%	N/A		N/A		$	359,259	5.00	%
Common Equity Tier 1 Risk-Based Ratio	799,457		20.54	%	175,190		4.50	%	$	272,518	7.00	%	253,052		6.50	%
Tier 1 Risk-Based Capital Ratio	799,457		20.54	%	233,587		6.00	%	330,915		8.50	%	311,449		8.00	%
Total Risk-Based Capital Ratio	835,899		21.47	%	311,449		8.00	%	408,777		10.50	%	389,311		10.00	%

Impact of Inflation and Changing Prices

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

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

60

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

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

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

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

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

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

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

On a quarterly basis, we measure and report NII at Risk to isolate the change in income related solely to interest-earning assets and interest-bearing liabilities. The following table illustrates the results of our NII at Risk analysis to determine the extent to which our net interest income over the following 12 months would change if prevailing interest rates increased or decreased by the specified amounts at June 30, 2022. It models instantaneous parallel shifts in market interest rates, implied by the forward yield curve over the next one year period.

61

Interest Rate Risk to Earnings (NII)
June 30, 2022
(Dollars in millions)
Change in Interest Rates (basis points)	$ Change NII	% Change NII
+400 BP	$(20.0)	(13.3)%
+300 BP	(13.0)	(8.7)%
+200 BP	(7.2)	(4.8)%
+100 BP	(2.8)	(1.8)%
-100 BP	0.6	0.4%

The NII at Risk reported at June 30, 2022 reflects that our earnings were in a liability sensitive position in which an increase in interest rates is expected to generate lower net interest income. During the six months ended June 30, 2022, our NII at Risk increased in connection with upward interest rate shocks as compared to December 31, 2021 primarily due to loan growth and the steepening yield curve, partially offset by an increase in the level of our hedged positions.

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

Interest Rate Risk to Capital (EVE)
June 30, 2022
(Dollars in millions)
Change in Interest Rates (basis points)	$ Change EVE	% Change EVE
+400 BP	$(411.7)	(52.6)%
+300 BP	(285.1)	(36.4)%
+200 BP	(171.6)	(21.9)%
+100 BP	(75.3)	(9.6)%
-100 BP	49.9	6.4%

The EVE reported at June 30, 2022 reflects that our market value of capital was in a liability sensitive position in which an increase in interest rates is expected to generate lower market values of capital. During the six months ended June 30, 2022, our EVE at risk increased as compared to December 31, 2021 primarily due loan growth and the steepening yield curve, partially offset by an increase in the level of our hedged positions.

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

Hedge Positions

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

We are currently utilizing FHLB advances and interest rate swaps to hedge our liability sensitive interest rate risk position. As of June 30, 2022, the Company maintained five interest rate swaps with an aggregate notional amount of $950.0 million to primarily hedge the interest rate risk associated with both fixed rate loans and hybrid adjustable

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loans in their fixed rate period. All of our swaps are designated as fair value hedges and involve the payment of a fixed rate amount to a counterparty in exchange for the Company receiving a variable rate payment over the life of the swaps without the exchange of the underlying notional amount. The gain or loss on derivatives, as well as the offsetting gain or loss on the hedged items attributable to the hedged risk are recognized in interest income for loans in our unaudited consolidated statements of income. During the three and six months ended June 30, 2022, the Company recognized an increase in interest income of $463 thousand and $385 thousand, respectively, in connection with interest rate swaps compared to a reduction of $3.3 million and $6.7 million, respectively, during the three and six months ended June 30, 2021. The prior year reduction in interest income primarily related to two separate, two-year interest rate swaps with a total notional amount of $1.0 billion, which matured during the year ended December 31, 2021.

The following table summarizes derivative instruments utilized by us as interest rate risk hedge positions as of June 30, 2022:

(Dollars in thousands)					Fair Value
Hedging Instrument	Hedge Accounting Type	Months to Maturity	Notional		Other Assets		Other Liabilities
Interest rate swap	Fair value hedge	8	$	350,000	$	6,084	$	—
Interest rate swap	Fair value hedge	12	300,000		8,190		—
Interest rate swap	Fair value hedge	21	100,000		1,357		—
Interest rate swap	Fair value hedge	35	100,000		640		—
Interest rate swap	Fair value hedge	24	100,000		—		32
			$	950,000	$	16,271	$	32

Counterparty Credit Risk

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

Item 4. Controls and Procedures

Management of the Company, with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness as of June 30, 2022, of the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2022 in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management of the Company as appropriate to allow timely decisions regarding required disclosures. Beginning with the filing of its Form 10-K for the year ending December 31, 2022, the Company will be subject to Section 404(b) of the Sarbanes-Oxley Act and will require the Company's registered public accounting firm to attest to, and report on, management's assessment of the effectiveness of its internal controls over financial reporting.

Changes in Internal Control over Financial Reporting

There was no change in the Company's internal control over financial reporting that occurred during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, such controls.

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PART II.

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

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

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

Purchases of Equity Securities

The table below summarizes the Company's monthly repurchases of equity securities during the quarter ended June 30, 2022:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Program (1)
(Dollars in thousands, except per share data)
April 1-30, 2022	260,271	$	13.36	260,271	$	621
May 1-31, 2022	46,406	13.39		46,406	—
June 1-30, 2022	—	—		—	—
Total	306,677	$	13.36	306,677	$	—

(1) On October 30, 2020, the Board of Directors of the Company authorized the repurchase of $20.0 million of the Company’s common stock pursuant to a formal program adopted on that date (the “Plan”). The Plan has been adopted in accordance with guidelines specified by Rule 10b5-1 and under Rule 10b-18 under the Exchange Act and the Company’s Insider Trading Policy. On October 29, 2021, the board of directors of the Company amended the Plan to eliminate its expiration date of December 31, 2021. The Plan was completed on May 4, 2022.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

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

65

SIGNATURES

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

		LUTHER BURBANK CORPORATION
DATED:	AUGUST 5, 2022	By: /s/ Simone Lagomarsino
		Simone Lagomarsino
		President and Chief Executive Officer
DATED:	AUGUST 5, 2022	By: /s/ Laura Tarantino
		Laura Tarantino
		Executive Vice President and Chief Financial Officer

66

EX-31.1

EXHIBIT 31.1

LUTHER BURBANK CORPORATION

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934.

I, Simone Lagomarsino, certify that:

a.I have reviewed this report on Form 10-Q of Luther Burbank Corporation;

b.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

c.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

d.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a- 15(f) and 15d-15(f)) for the registrant and have:

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

e.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

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.

Date:     August 5, 2022

By:    /s/ Simone Lagomarsino

        Chief Executive Officer

        (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

LUTHER BURBANK CORPORATION

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934.

I, Laura Tarantino, certify that:

a.I have reviewed this report on Form 10-Q of Luther Burbank Corporation;

b.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

c.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

d.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a- 15(f) and 15d-15(f)) for the registrant and have:

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

e.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

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.

Date:     August 5, 2022

By:     /s/ Laura Tarantino

        Chief Financial Officer

        (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

LUTHER BURBANK CORPORATION

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.

I, Simone Lagomarsino, state and attest that:

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, 2022 (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.

Date:     August 5, 2022

By:    /s/ Simone Lagomarsino

    Chief Executive Officer

    (Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

LUTHER BURBANK CORPORATION

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.

I, Laura Tarantino, state and attest that:

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, 2022 (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.

Date:     August 5, 2022

By:     /s/ Laura Tarantino

    Chief Financial Officer

    (Principal Financial Officer)

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2022	Aug. 01, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-38317
Entity Incorporation, State or Country Code	CA
Entity Tax Identification Number	68-0270948
Entity Address, Address Line One	520 Third St, Fourth Floor
Entity Address, City or Town	Santa Rosa
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95401
City Area Code	844
Local Phone Number	446-8201
Title of 12(b) Security	Common stock, no par value
Trading Symbol	LBC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock Shares Outstanding (in shares)		51,074,871
Amendment Flag	false
Entity Registrant Name	Luther Burbank Corp.
Entity Central Index Key	0001475348
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2

XML

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
ASSETS
Cash and cash equivalents	$ 86,548	$ 138,413
Available for sale debt securities, at fair value	661,432	647,317
Held to maturity debt securities, at amortized cost (fair value of $3,067 and $4,018 at June 30, 2022 and December 31, 2021, respectively)	3,162	3,829
Equity securities, at fair value	10,772	11,693
Loans receivable, net of allowance for loan losses of $35,535 and $35,535 at June 30, 2022 and December 31, 2021, respectively	6,602,294	6,261,885
Accrued interest receivable	19,297	17,761
Federal Home Loan Bank ("FHLB") stock, at cost	27,874	23,411
Premises and equipment, net	14,969	16,090
Goodwill	3,297	3,297
Prepaid expenses and other assets	100,871	56,261
Total assets	7,530,516	7,179,957
Liabilities:
Deposits	5,668,759	5,538,243
FHLB advances	954,947	751,647
Junior subordinated deferrable interest debentures	61,857	61,857
Senior debt
$95,000 face amount, 6.5% interest rate, due September 30, 2024 (less debt issuance costs of $276 and $338 at June 30, 2022 and December 31, 2021, respectively)	94,724	94,662
Accrued interest payable	276	118
Other liabilities and accrued expenses	78,331	64,297
Total liabilities	6,858,894	6,510,824
Commitments and contingencies (Note 16)
Stockholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized; none issued and outstanding at June 30, 2022 and December 31, 2021, respectively	0	0
Common stock, no par value; 100,000,000 shares authorized; 51,063,498 and 51,682,398 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	397,620	406,904
Retained earnings	295,297	262,141
Accumulated other comprehensive (loss) income, net of taxes	(21,295)	88
Total stockholders' equity	671,622	669,133
Total liabilities and stockholders' equity	$ 7,530,516	$ 7,179,957

XML

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Fair value of held-to-maturity securities	$ 3,067,000	$ 4,018,000
Allowance for loan losses	$ 35,535,000	$ 35,535,000
Debt Instrument [Line Items]
Preferred stock shares authorized (in shares)	5,000,000	5,000,000
Preferred stock shares issued (in shares)	0	0
Preferred stock shares outstanding (in shares)	0	0
Common stock shares authorized (in shares)	100,000,000	100,000,000
Common stock shares issued (in shares)	51,063,498	51,682,398
Common stock shares outstanding (in shares)	51,063,498	51,682,398
Senior Unsecured Term Notes, September 2014 | Senior Unsecured Term Notes
Debt Instrument [Line Items]
Principal	$ 95,000,000	$ 95,000,000
Debt interest rate	6.50%
Unamortized debt issuance costs	$ 276,000	$ 338,000

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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Interest and fee income:
Loans	$ 56,912	$ 54,191	$ 110,545	$ 108,249
Investment securities	2,863	2,091	5,163	4,074
Cash, cash equivalents and restricted cash	198	34	265	84
Total interest and fee income	59,973	56,316	115,973	112,407
Interest expense:
Deposits	6,913	9,749	12,933	21,355
FHLB advances	3,628	3,839	6,725	7,772
Junior subordinated deferrable interest debentures	385	255	660	514
Senior debt	1,575	1,574	3,149	3,148
Total interest expense	12,501	15,417	23,467	32,789
Net interest income before provision for loan losses	47,472	40,899	92,506	79,618
Provision for (reversal of) loan losses	2,500	(2,500)	0	(5,000)
Net interest income after provision for loan losses	44,972	43,399	92,506	84,618
Noninterest income:
FHLB dividends	342	371	696	738
Other income	20	139	(276)	81
Total noninterest income	362	510	420	819
Noninterest expense:
Compensation and related benefits	7,070	8,641	17,289	19,021
Deposit insurance premium	479	467	960	939
Professional and regulatory fees	634	614	1,173	1,098
Occupancy	1,197	1,257	2,391	2,472
Depreciation and amortization	746	678	1,349	1,333
Data processing	1,007	873	1,995	1,846
Marketing	525	235	983	527
Other expenses	1,667	1,115	2,697	2,048
Total noninterest expense	13,325	13,880	28,837	29,284
Income before provision for income taxes	32,009	30,029	64,089	56,153
Provision for income taxes	9,442	8,813	18,582	16,526
Net income	$ 22,567	$ 21,216	$ 45,507	$ 39,627
Basic earnings per common share (in usd per share)	$ 0.44	$ 0.41	$ 0.89	$ 0.76
Diluted earnings per common share (in usd per share)	0.44	0.41	0.89	0.76
Dividends per common share (in usd per share)	$ 0.12	$ 0.06	$ 0.24	$ 0.12

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 22,567	$ 21,216	$ 45,507	$ 39,627
Unrealized (loss) gain on available for sale debt securities:
Unrealized holding (loss) gain arising during the period	(13,150)	512	(30,115)	(3,303)
Tax effect	3,813	(150)	8,732	959
Total other comprehensive (loss) income, net of tax	(9,337)	362	(21,383)	(2,344)
Comprehensive income	$ 13,230	$ 21,578	$ 24,124	$ 37,283

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Common Stock	Retained Earnings	Accumulated Other Comprehensive (Loss) Income (Net of Taxes) Available for Sale Securities
Beginning balance (shares) at Dec. 31, 2020		52,220,266
Beginning balance at Dec. 31, 2020	$ 613,691	$ 414,120	$ 192,834	$ 6,737
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	39,627		39,627
Other comprehensive income (loss)	(2,344)			(2,344)
Issuance of restricted stock awards (in shares)		289,473
Settled restricted stock units (in shares)		68,873
Shares withheld to pay taxes on stock based compensation (in shares)		(85,825)
Shares withheld to pay taxes on stock based compensation	(901)	$ (901)
Restricted stock forfeitures (in shares)		(52,798)
Restricted stock forfeitures	(54)	$ (67)	13
Stock based compensation expense	1,301	$ 1,301
Shares repurchased (in shares)		(578,285)
Shares repurchased	(6,593)	$ (6,593)
Cash dividends	(6,028)		(6,028)
Ending balance (shares) at Jun. 30, 2021		51,861,704
Ending balance at Jun. 30, 2021	638,699	$ 407,860	226,446	4,393
Beginning balance (shares) at Mar. 31, 2021		52,231,912
Beginning balance at Mar. 31, 2021	623,969	$ 411,702	208,236	4,031
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	21,216		21,216
Other comprehensive income (loss)	362			362
Issuance of restricted stock awards (in shares)		6,395
Stock based compensation expense	651	$ 651
Shares repurchased (in shares)		(376,603)
Shares repurchased	(4,493)	$ (4,493)
Cash dividends	(3,006)		(3,006)
Ending balance (shares) at Jun. 30, 2021		51,861,704
Ending balance at Jun. 30, 2021	638,699	$ 407,860	226,446	4,393
Beginning balance (shares) at Dec. 31, 2021		51,682,398
Beginning balance at Dec. 31, 2021	669,133	$ 406,904	262,141	88
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	45,507		45,507
Other comprehensive income (loss)	(21,383)			(21,383)
Issuance of restricted stock awards (in shares)		206,675
Settled restricted stock units (in shares)		6,759
Shares withheld to pay taxes on stock based compensation (in shares)		(62,422)
Shares withheld to pay taxes on stock based compensation	(875)	$ (875)
Restricted stock forfeitures (in shares)		(37,839)
Restricted stock forfeitures	(57)	$ (71)	14
Stock based compensation expense	1,396	$ 1,396
Shares repurchased (in shares)		(732,073)
Shares repurchased	(9,734)	$ (9,734)
Cash dividends	(12,365)		(12,365)
Ending balance (shares) at Jun. 30, 2022		51,063,498
Ending balance at Jun. 30, 2022	671,622	$ 397,620	295,297	(21,295)
Beginning balance (shares) at Mar. 31, 2022		51,403,914
Beginning balance at Mar. 31, 2022	668,000	$ 401,102	278,856	(11,958)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	22,567		22,567
Other comprehensive income (loss)	(9,337)			(9,337)
Restricted stock forfeitures (in shares)		(33,739)
Restricted stock forfeitures	(55)	$ (67)	12
Stock based compensation expense	683	$ 683
Shares repurchased (in shares)		(306,677)
Shares repurchased	(4,098)	$ (4,098)
Cash dividends	(6,138)		(6,138)
Ending balance (shares) at Jun. 30, 2022		51,063,498
Ending balance at Jun. 30, 2022	$ 671,622	$ 397,620	$ 295,297	$ (21,295)

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Stockholders' Equity [Abstract]
Cash dividends (in usd per share)	$ 0.12	$ 0.06	$ 0.24	$ 0.12

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Net income	$ 45,507	$ 39,627
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,349	1,333
Provision for (reversal of) loan losses	0	(5,000)
Amortization of deferred loan costs, net	8,815	9,831
Amortization of premiums on investment securities, net	528	1,225
Stock based compensation expense, net of forfeitures	1,325	1,234
Change in fair value of mortgage servicing rights	136	407
Change in fair value of equity securities	921	178
Other items, net	110	100
Effect of changes in:
Accrued interest receivable	(1,536)	(114)
Accrued interest payable	158	(861)
Prepaid expenses and other assets	(5,798)	2,539
Other liabilities and accrued expenses	(3,049)	(5,928)
Net cash provided by operating activities	48,466	44,571
Cash flows from investing activities:
Proceeds from maturities, paydowns and calls of available for sale debt securities	72,742	71,218
Proceeds from maturities and paydowns of held to maturity debt securities	659	3,070
Purchases of available for sale debt securities	(117,494)	(135,200)
Net increase in loans receivable	(362,403)	(123,673)
Purchase of loans, including discounts/premiums	0	(286,917)
Purchase of FHLB stock, net	(4,463)	(4,013)
Purchase of premises and equipment	(228)	(155)
Net cash used in investing activities	(411,187)	(475,670)
Cash flows from financing activities:
Net increase in deposits	130,516	137,643
Proceeds from long-term FHLB advances	150,000	150,000
Repayment of long-term FHLB advances	(100,000)	(180,000)
Net change in short-term FHLB advances	153,300	228,400
Shares withheld for taxes on vested restricted stock	(875)	(901)
Shares repurchased	(9,734)	(6,593)
Cash paid for dividends	(12,351)	(6,015)
Net cash provided by financing activities	310,856	322,534
Decrease in cash, cash equivalents and restricted cash	(51,865)	(108,565)
Cash, cash equivalents and restricted cash, beginning of period	138,413	178,861
Cash, cash equivalents and restricted cash, end of period	86,548	70,296
Supplemental disclosure of cash flow information: Cash paid during the period for:
Interest	23,309	33,650
Income taxes	15,369	18,883
Non-cash investing activity:
Lease liabilities arising from obtaining right-of-use assets	$ 17,514	$ 0

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NATURE OF OPERATIONS

6 Months Ended

Jun. 30, 2022

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 the Bank's wholly-owned subsidiary, Burbank Investor Services. The Company also owns Burbank Financial Inc., a real estate investment company that provides limited loan administrative support to the Bank, and all the common interests in Luther Burbank Statutory Trusts I and II, entities created to issue trust preferred securities.

The Bank conducts its business from its headquarters 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, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 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 six months ended June 30, 2022 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2022.

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.

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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	22,567	$	21,216	$	45,507	$	39,627
Weighted average basic common shares outstanding	50,794,950		51,726,331		51,066,219		51,854,531
Add: Dilutive effects of assumed vesting of restricted stock	112,312		134,802		94,621		125,155
Weighted average diluted common shares outstanding	50,907,262		51,861,133		51,160,840		51,979,686
Income per common share:
Basic EPS	$	0.44	$	0.41	$	0.89	$	0.76
Diluted EPS	$	0.44	$	0.41	$	0.89	$	0.76
Anti-dilutive shares not included in calculation of diluted earnings per share	1,359		—		433		2,706

Adoption of New Financial Accounting Standards

FASB ASU 2016-13

In June 2016, the Financial Accounting Standards Board ("FASB") issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss ("CECL") model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held to maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. The transition will be applied as follows:

-    For debt securities with other than temporary impairment ("OTTI"), the guidance will be applied prospectively.

-    Existing purchased credit impaired ("PCI") assets will be grandfathered and classified as purchased credit deteriorated ("PCD") assets at the date of adoption. The assets will be grossed up for the allowance for expected credit losses for all PCD assets at the date of adoption and will continue to recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date. Subsequent changes in expected credit losses will be recorded through the allowance.

-    For all other assets within the scope of CECL, a cumulative-effect adjustment will be recognized in retained earnings as of the beginning of the first reporting period in which the guidance is effective.

These amendments are effective for PBEs that are SEC filers for annual periods and interim periods within those annual periods beginning after December 15, 2019. As an emerging growth company, the Company expects to adopt this guidance on January 1, 2023. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective.

Through June 30, 2022, CECL implementation activities have generally focused on capturing and validating loan data, segmenting the loan portfolio, evaluating credit loss methodologies and models, as well as evaluating model results and sensitivities. In determining an expected allowance under CECL, the Company has selected a credit loss model that utilizes an approach focused on a loan's probability of default and loss given default. As part of the process to test and refine our CECL model, the Company has completed quarterly model runs for analysis and backtesting purposes starting with the third quarter of 2018. This process has been on-going and will continue until our adoption date. Continuing implementation activities include the completion of a third party model validation, refining qualitative factor adjustments, finalizing policies and disclosures and evaluating, documenting and testing internal controls. We estimate that the adoption of the CECL standard would not currently result in a material change in our allowance for credit losses, which, if necessary, will be recorded as a cumulative-effect adjustment to retained earnings, net of tax as of January 1, 2023. The ultimate impact will depend on the portfolio and forecasts when the standard is adopted.

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INVESTMENT SECURITIES

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

INVESTMENT SECURITIES

Available for Sale

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

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
At June 30, 2022:
Government and Government Sponsored Entities:
Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")	$	416,134	$	1,468	$	(16,427)	$	401,175
Residential MBS and CMOs	222,336		129		(14,033)		208,432
Agency bonds	25,576		225		—		25,801
Other asset backed securities ("ABS")	27,377		—		(1,353)		26,024
Total available for sale debt securities	$	691,423	$	1,822	$	(31,813)	$	661,432
At December 31, 2021:
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	407,111	$	3,281	$	(2,646)	$	407,746
Residential MBS and CMOs	200,775		1,225		(1,867)		200,133
Agency bonds	10,587		244		—		10,831
Other ABS	28,720		37		(150)		28,607
Total available for sale debt securities	$	647,193	$	4,787	$	(4,663)	$	647,317

Net unrealized gains (losses) on available for sale investment securities are recorded as accumulated other comprehensive income (loss) within stockholders’ equity and totaled $(21.3) million and $88 thousand, net of $8.7 million and $(36) thousand in tax assets (liabilities), at June 30, 2022 and December 31, 2021, 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 six months ended June 30, 2022 or 2021.

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:

	June 30, 2022
	Less than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	152,632	$	(8,905)	$	71,739	$	(7,522)	$	224,371	$	(16,427)
Residential MBS and CMOs	153,853		(9,659)		26,193		(4,374)		180,046		(14,033)
Other ABS	26,024		(1,353)		—		—		26,024		(1,353)
Total available for sale debt securities	$	332,509	$	(19,917)	$	97,932	$	(11,896)	$	430,441	$	(31,813)

At June 30, 2022, the Company held 89 residential MBS and CMOs of which 66 were in a loss position and six had been in a loss position for twelve months or more. The Company held 59 commercial MBS and CMOs of which 34 were in a loss position and ten had been in a loss position for twelve months or more. The Company held three other ABS of which three were in a loss position and none had been in a loss position for twelve months or more.

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

At December 31, 2021, the Company held 88 residential MBS and CMOs of which 14 were in a loss position and four had been in a loss position for twelve months or more. The Company held 54 commercial MBS and CMOs of which 20 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.

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 June 30, 2022 or December 31, 2021.

As of June 30, 2022 and December 31, 2021, 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 Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Estimated Fair Value
As of June 30, 2022:
Government Sponsored Entities:
Residential MBS	$	3,097	$	—	$	(95)	$	3,002
Other investments	65		—		—		65
Total held to maturity investment securities	$	3,162	$	—	$	(95)	$	3,067
As of December 31, 2021:
Government Sponsored Entities:
Residential MBS	$	3,761	$	189	$	—	$	3,950
Other investments	68		—		—		68
Total held to maturity investment securities	$	3,829	$	189	$	—	$	4,018

The following table summarizes the gross unrecognized losses and fair value of held to maturity investment securities, aggregated by investment category and length of time that individual securities have been in a continuous unrecognized loss position:

	Less than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses
As of June 30, 2022:
Government Sponsored Entities:
Residential MBS	$	3,002	$	(95)	$	—	$	—	$	3,002	$	(95)

At June 30, 2022, the Company had seven held to maturity residential MBS of which seven were in a loss position and none had been in a loss position for twelve months or more.

The unrecognized losses on the Company’s held to maturity investments at June 30, 2022 were caused by interest rate changes. In addition, the contractual cash flows of these investments are guaranteed by agencies sponsored by the U.S. government. Accordingly, it is expected that the securities will not be settled at a price less than amortized cost. Because the decline in market value is attributable to changes in interest rates but not credit quality, and because the Company has the ability and intent to hold those investments until maturity, the Company does not consider these investments to be other-than-temporarily impaired at June 30, 2022.

The following table summarizes the scheduled maturities of available for sale and held to maturity investment securities as of June 30, 2022:

	June 30, 2022
(Dollars in thousands)	Amortized Cost		Fair Value
Available for sale debt securities
Five to ten years	$	25,576	$	25,801
MBS, CMOs and other ABS	665,847		635,631
Total available for sale debt securities	$	691,423	$	661,432
Held to maturity investments securities
Five to ten years	$	65	$	65
MBS	3,097		3,002
Total held to maturity debt securities	$	3,162	$	3,067

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 June 30, 2022 or December 31, 2021.

Equity Securities

Equity securities consist of investments in a qualified community reinvestment fund. At June 30, 2022 and December 31, 2021, the fair value of equity securities totaled $10.8 million and $11.7 million, respectively. Changes in fair value are recognized in other noninterest income and totaled $(344) thousand and $(921) thousand during the three and six months ended June 30, 2022, respectively, compared to $33 thousand and $(178) thousand during the three and six months ended June 30, 2021, respectively. There were no sales of equity securities during the three or six months ended June 30, 2022 or 2021.

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LOANS

6 Months Ended

Jun. 30, 2022

Receivables [Abstract]

LOANS

LOANS

Loans consist of the following:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Permanent mortgages on:
Multifamily residential	$	4,414,725	$	4,210,735
Single family residential	2,011,374		1,881,676
Commercial real estate	184,708		187,097
Land and construction loans	27,022		17,912
Total	6,637,829		6,297,420
Allowance for loan losses	(35,535)		(35,535)
Loans held for investment, net	$	6,602,294	$	6,261,885

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

The following table summarizes activity in and the allocation of the allowance for loan losses by portfolio segment:

(Dollars in thousands)	Multifamily Residential		Single Family Residential		Commercial Real Estate		Land and Construction		Total
Three months ended June 30, 2022
Allowance for loan losses:
Beginning balance allocated to portfolio segments	$	24,151	$	6,797	$	1,882	$	205	$	33,035
Provision for (reversal of) loan losses	1,856		828		(209)		25		2,500
Charge-offs	—		—		—		—		—
Recoveries	—		—		—		—		—
Ending balance allocated to portfolio segments	$	26,007	$	7,625	$	1,673	$	230	$	35,535
Three months ended June 30, 2021
Allowance for loan losses:
Beginning balance allocated to portfolio segments	$	30,838	$	9,816	$	2,871	$	241	$	43,766
Reversal of provision for loan losses	(724)		(1,546)		(166)		(64)		(2,500)
Charge-offs	—		—		—		—		—
Recoveries	—		62		—		7		69
Ending balance allocated to portfolio segments	$	30,114	$	8,332	$	2,705	$	184	$	41,335
Six months ended June 30, 2022
Allowance for loan losses:
Beginning balance allocated to portfolio segments	$	26,043	$	7,224	$	2,094	$	174	$	35,535
(Reversal of) provision for loan losses	(36)		401		(421)		56		—
Charge-offs	—		—		—		—		—
Recoveries	—		—		—		—		—
Ending balance allocated to portfolio segments	$	26,007	$	7,625	$	1,673	$	230	$	35,535
Six months ended June 30, 2021
Allowance for loan losses:
Beginning balance allocated to portfolio segments	$	33,259	$	9,372	$	3,347	$	236	$	46,214
Reversal of provision for loan losses	(3,145)		(1,104)		(642)		(109)		(5,000)
Charge-offs	—		—		—		—		—
Recoveries	—		64		—		57		121
Ending balance allocated to portfolio segments	$	30,114	$	8,332	$	2,705	$	184	$	41,335

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

(Dollars in thousands)	Multifamily Residential		Single Family Residential		Commercial Real Estate		Land and Construction		Total
As of June 30, 2022:
Ending allowance balance allocated to:
Loans individually evaluated for impairment	$	—	$	25	$	—	$	—	$	25
Loans collectively evaluated for impairment	26,007		7,600		1,673		230		35,510
Ending balance	$	26,007	$	7,625	$	1,673	$	230	$	35,535
Loans:
Ending balance: individually evaluated for impairment	$	852	$	8,012	$	—	$	—	$	8,864
Ending balance: collectively evaluated for impairment	4,413,873		2,003,362		184,708		27,022		6,628,965
Ending balance	$	4,414,725	$	2,011,374	$	184,708	$	27,022	$	6,637,829
As of December 31, 2021:
Ending allowance balance allocated to:
Loans individually evaluated for impairment	$	—	$	25	$	—	$	—	$	25
Loans collectively evaluated for impairment	26,043		7,199		2,094		174		35,510
Ending balance	$	26,043	$	7,224	$	2,094	$	174	$	35,535
Loans:
Ending balance: individually evaluated for impairment	$	505	$	5,687	$	—	$	—	$	6,192
Ending balance: collectively evaluated for impairment	4,210,230		1,875,989		187,097		17,912		6,291,228
Ending balance	$	4,210,735	$	1,881,676	$	187,097	$	17,912	$	6,297,420

The Company assigns a risk rating to all loans and periodically performs detailed reviews of all loans to identify credit risks and to assess the overall collectability of the portfolio. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, as well as the financial performance and/or other characteristics of loan collateral. These credit quality indicators are used to assign a risk rating to each individual loan. The risk ratings can be grouped into six major categories, defined as follows:

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

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

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

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

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

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 table summarizes the loan portfolio allocated by management’s internal risk ratings at June 30, 2022 and December 31, 2021.

(Dollars in thousands)	Multifamily Residential		Single Family Residential		Commercial Real Estate		Land, Construction and NM		Total
As of June 30, 2022:
Grade:
Pass	$	4,360,690	$	1,993,279	$	180,522	$	27,022	$	6,561,513
Watch	31,663		13,917		3,223		—		48,803
Special mention	4,058		—		963		—		5,021
Substandard	18,314		4,178		—		—		22,492
Total	$	4,414,725	$	2,011,374	$	184,708	$	27,022	$	6,637,829
As of December 31, 2021:
Grade:
Pass	$	4,129,767	$	1,856,942	$	180,950	$	17,523	$	6,185,182
Watch	66,062		22,946		6,147		389		95,544
Special mention	4,586		—		—		—		4,586
Substandard	10,320		1,788		—		—		12,108
Total	$	4,210,735	$	1,881,676	$	187,097	$	17,912	$	6,297,420

The following table summarizes an aging analysis of the loan portfolio by the time past due at June 30, 2022 and December 31, 2021:

(Dollars in thousands)	30 Days		60 Days		90+ Days		Non-accrual		Current		Total
As of June 30, 2022:
Loans:
Multifamily residential	$	2,957	$	—	$	—	$	852	$	4,410,916	$	4,414,725
Single family residential	359		—		—		4,178		2,006,837		2,011,374
Commercial real estate	—		—		—		—		184,708		184,708
Land and construction	—		—		—		—		27,022		27,022
Total	$	3,316	$	—	$	—	$	5,030	$	6,629,483	$	6,637,829
As of December 31, 2021:
Loans:
Multifamily residential	$	—	$	—	$	—	$	505	$	4,210,230	$	4,210,735
Single family residential	271		—		—		1,788		1,879,617		1,881,676
Commercial real estate	—		—		—		—		187,097		187,097
Land and construction	—		—		—		—		17,912		17,912
Total	$	271	$	—	$	—	$	2,293	$	6,294,856	$	6,297,420

The following table summarizes information related to impaired loans at June 30, 2022 and December 31, 2021:

	As of June 30, 2022						As of December 31, 2021
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Multifamily residential	$	852	$	927	$	—	$	505	$	582	$	—
Single family residential	7,192		7,384		—		4,847		5,033		—
	8,044		8,311		—		5,352		5,615		—
With an allowance recorded:
Single family residential	820		817		25		840		836		25
	820		817		25		840		836		25
Total:
Multifamily residential	852		927		—		505		582		—
Single family residential	8,012		8,201		25		5,687		5,869		25
	$	8,864	$	9,128	$	25	$	6,192	$	6,451	$	25

The following tables summarize information related to impaired loans for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,
	2022						2021
(Dollars in thousands)	Average Recorded Investment		Interest Income		Cash Basis Interest		Average Recorded Investment		Interest Income		Cash Basis Interest
With no related allowance recorded:
Multifamily residential	$	767	$	17	$	17	$	908	$	8	$	8
Single family residential	6,219		37		10		4,872		50		28
	6,986		54		27		5,780		58		36
With an allowance recorded:
Single family residential	825		6		—		863		6		—
	825		6		—		863		6		—
Total:
Multifamily residential	767		17		17		908		8		8
Single family residential	7,044		43		10		5,735		56		28
	$	7,811	$	60	$	27	$	6,643	$	64	$	36

	Six Months Ended June 30,
	2022						2021
(Dollars in thousands)	Average Recorded Investment		Interest Income		Cash Basis Interest		Average Recorded Investment		Interest Income		Cash Basis Interest
With no related allowance recorded:
Multifamily residential	$	654	$	25	$	25	$	967	$	14	$	14
Single family residential	5,626		80		29		5,431		111		85
	6,280		105		54		6,398		125		99
With an allowance recorded:
Single family residential	830		12		—		868		13		—
	830		12		—		868		13		—
Total:
Multifamily residential	654		25		25		967		14		14
Single family residential	6,456		92		29		6,299		124		85
	$	7,110	$	117	$	54	$	7,266	$	138	$	99

The following table summarizes the recorded investment related to troubled debt restructurings ("TDRs") at June 30, 2022 and December 31, 2021:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Troubled debt restructurings:
Single family residential	$	1,592	$	1,204

The Company has allocated $25 thousand of its allowance for loan losses for loans modified in TDRs at both June 30, 2022 and December 31, 2021. The Company does not have commitments to lend additional funds to borrowers with loans whose terms have been modified in TDRs.

During the six months ended June 30, 2022, the Company modified the terms of one loan that qualified as a TDR. The following table provides details of this modification:

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

Terms of the modification above included suspension of loan payments for six months and a similar extension of the loan term. The TDR above resulted in no increase to the allowance for loan losses and no charge-offs primarily due to collateral support provided by the secondary source of repayment. There were no new TDRs during the three or six months ended June 30, 2021.

The Company had no TDRs with a subsequent payment default within twelve months following the modification during the three or six months ended June 30, 2022 and 2021. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

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NONPERFORMING ASSETS

6 Months Ended

Jun. 30, 2022

Receivables [Abstract]

NONPERFORMING ASSETS

NONPERFORMING ASSETS

Nonperforming assets include nonperforming loans plus real estate owned. The Company’s nonperforming assets at June 30, 2022 and December 31, 2021 are indicated below:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Non-accrual loans:
Multifamily residential	$	852	$	505
Single family residential	4,178		1,788
Total non-accrual loans	5,030		2,293
Real estate owned	—		—
Total nonperforming assets	$	5,030	$	2,293

Interest income on non-accrual loans is subsequently recognized on a cash basis as long as the remaining unpaid principal amount of the loans are deemed to be fully collectible. If there is doubt regarding the collectability of the loan, then any interest payments received are applied to principal. Interest income was recognized on a cash basis on non-accrual loans during the three and six months ended June 30, 2022 totaling $27 thousand and $54 thousand, respectively, compared to $36 thousand and $99 thousand during the three and six months ended June 30, 2021. Contractual interest not recorded on nonperforming loans during the three and six months ended June 30, 2022 totaled $17 thousand and $24 thousand, respectively, compared to $1 thousand and $16 thousand for the three and six months ended June 30, 2021, respectively.

Generally, nonaccrual loans are considered impaired because the repayment of the loan will not be made in accordance with the original contractual agreement.

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MORTGAGE SERVICING RIGHTS

6 Months Ended

Jun. 30, 2022

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)	June 30, 2022		December 31, 2021
Mortgage loans serviced for:
Federal Home Loan Mortgage Corporation ("Freddie Mac")	$	93,840	$	127,431
Other financial institutions	48,683		58,298
Total mortgage loans serviced for others	$	142,523	$	185,729

Custodial account balances maintained in connection with serviced loans totaled $3.7 million and $5.0 million at June 30, 2022 and December 31, 2021, respectively.

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

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2022		2021		2022		2021
Beginning balance	$	811	$	1,428	$	915	$	1,599
Additions	—		—		—		—
Disposals	—		—		—		—
Changes in fair value due to changes in assumptions	—		—		—		—
Other changes in fair value	(32)		(236)		(136)		(407)
Ending balance	$	779	$	1,192	$	779	$	1,192

Fair value as of June 30, 2022 was determined using a discount rate of 10%, prepayment speeds ranging from 4.7% to 49.7% and a weighted average default rate of 5%. The weighted average prepayment speed at June 30, 2022 was 29.2%. Fair value as of December 31, 2021 was determined using a discount rate of 10%, prepayment speeds ranging from 7.6% to 48.8% and a weighted average default rate of 5%. The weighted average prepayment speed at December 31, 2021 was 29.2%.

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LEASES

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

LEASES

LEASES

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

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

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

Supplemental lease information as of or for the three and six months ended June 30, 2022 is as follows:

(Dollars in thousands)	June 30, 2022
Operating lease right-of-use assets included in prepaid expenses and other assets	$	15,393
Operating lease liabilities included in other liabilities and accrued expenses	$	15,682
Weighted average remaining lease term (years) of operating leases	4.9
Weighted average discount rate of operating leases	1.88		%

(Dollars in thousands)	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
Operating lease costs included in occupancy expense	$	910	$	1,839
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,014	$	2,051

At June 30, 2022, future undiscounted lease payments with initial terms of one year or more are as follows:

(Dollars in thousands)
July 1 - December 31, 2022	$	1,942
2023	3,719
2024	3,013
2025	2,594
2026	2,398
Thereafter	2,841
Total undiscounted lease payments	16,507
Less: Imputed interest	(825)
Net lease liabilities	$	15,682

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DEPOSITS

6 Months Ended

Jun. 30, 2022

Deposits [Abstract]

DEPOSITS

DEPOSITS

A summary of deposits at June 30, 2022 and December 31, 2021 is as follows:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Money market savings	$	2,353,150	$	2,294,367
Time deposits	2,240,395		2,335,141
Money market checking	671,310		580,325
Interest-bearing demand	230,587		176,126
Noninterest-bearing demand	173,317		152,284
Total	$	5,668,759	$	5,538,243

The Company had time deposits that met or exceeded the Federal Deposit Insurance Corporation ("FDIC") insurance limit of $250 thousand of $973.4 million and $1.1 billion at June 30, 2022 and December 31, 2021, respectively.

The Company utilizes brokered deposits as an additional source of funding. The Company had brokered deposits of $123.1 million and $25.8 million at June 30, 2022 and December 31, 2021, respectively.

Maturities of the Company’s time deposits at June 30, 2022 are summarized as follows:

(Dollars in thousands)
July 1 - December 31, 2022	$	1,355,883
2023	732,749
2024	95,164
2025	7,830
2026	41,073
Thereafter	7,696
Total	$	2,240,395

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FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES

6 Months Ended

Jun. 30, 2022

Advance from Federal Home Loan Bank [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 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, 2022 and December 31, 2021, the Bank had pledged various mortgage loans totaling approximately $2.8 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 $579.7 million and $583.0 million as of June 30, 2022 and December 31, 2021, respectively, secure this borrowing arrangement. There were no borrowings outstanding with the FRB as of June 30, 2022 or December 31, 2021.

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

	Outstanding Balances				As of June 30, 2022
(Dollars in thousands)	June 30, 2022		December 31, 2021		Minimum Interest Rate		Maximum Interest Rate		Weighted Average Rate		Maturity Dates
Fixed rate short-term	$	153,300	$	—	1.66	%	1.75	%	1.70	%	July 2022
Fixed rate long-term	801,647		751,647		0.38	%	7.33	%	1.81	%	March 2023 to March 2030
	$	954,947	$	751,647

The Bank's available borrowing capacity based on pledged loans to the FHLB and the FRB totaled $1.1 billion and $1.2 billion at June 30, 2022 and December 31, 2021, respectively. As of both June 30, 2022 and December 31, 2021, the Bank had aggregate loan balances of $2.5 billion available to pledge to the FHLB and FRB to increase its borrowing capacity. As of June 30, 2022 and December 31, 2021, the Bank pledged as collateral a $62.6 million FHLB letter of credit to Freddie Mac related to our multifamily securitization reimbursement obligation.

Short-term borrowings are borrowings with original maturities of 90 days or less. During the three and six months ended June 30, 2022, there was a maximum amount of short-term borrowings outstanding of $228.4 million for both periods, an average amount outstanding of $95.0 million and $58.6 million, respectively, with a weighted average interest rate of 1.05% and 0.92%, respectively. During the three and six months June 30, 2021, there was a maximum amount of short-term borrowings outstanding of $352.9 million for both periods, an average amount outstanding of $242.1 million and $165.9 million, respectively, with a weighted average interest rate of 0.13% and 0.14%, respectively.

The following table summarizes scheduled principal payments on FHLB advances over the next five years as of June 30, 2022:

(Dollars in thousands)
July 1 - December 31, 2022	$	153,300
2023	250,000
2024	350,000
2025	101,500
2026	100,000
Thereafter	147
	$	954,947

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JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

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

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

The Company has entered into contractual arrangements which, taken collectively, fully and unconditionally guarantee payment of: (i) accrued and unpaid distributions required to be paid on the Trust 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, 2022 and December 31, 2021:

	June 30, 2022				December 31, 2021				Date	Maturity	Rate Index
Issuer	Amount		Rate		Amount		Rate		Issued	Date	(Quarterly Reset)
(Dollars in thousands)
Luther Burbank Statutory Trust I	$	41,238	3.21	%	$	41,238	1.58	%	3/1/2006	6/15/2036	3 month LIBOR + 1.38%
Luther Burbank Statutory Trust II	$	20,619	3.45	%	$	20,619	1.82	%	3/1/2007	6/15/2037	3 month LIBOR + 1.62%

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SENIOR DEBT

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

SENIOR DEBT

SENIOR DEBT

In September 2014, the Company issued $95 million in senior unsecured term notes to qualified institutional investors. The following table summarizes information on these notes as of June 30, 2022 and December 31, 2021:

	June 30, 2022				December 31, 2021
(Dollars in thousands)	Principal		Unamortized Debt Issuance Costs		Principal		Unamortized Debt Issuance Costs		Maturity Date	Fixed Interest Rate
Senior Unsecured Term Notes	$	95,000	$	276	$	95,000	$	338	9/30/2024	6.50	%

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DERIVATIVES AND HEDGING ACTIVITIES

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING ACTIVITIES

DERIVATIVES AND HEDGING ACTIVITIES

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

Fair Value Hedges of Interest Rate Risk

As of June 30, 2022, the Company held five interest rate swaps with a total notional amount of $950 million. During the six months ended June 30, 2022, the Company entered into three new swap agreements with an aggregate notional amount of $300.0 million. The other two swaps were entered into in February and June 2021. The swaps provide a hedge against the interest rate risk associated with both fixed rate loans and hybrid adjustable loans in their fixed rate period. Additionally, during the three and six months ended June 30, 2021, the Company also held two separate, two-year interest rate swaps with a total notional amount of $1.0 billion. These swaps, which were in equal notional amounts of $500.0 million, matured in June and August 2021, and provided a hedge against the interest rate risk related to certain hybrid multifamily loans which were in their fixed rate period.

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

The following table presents the effect of the Company’s interest rate swaps on the unaudited consolidated statements of income for the three and six months ended June 30, 2022 and 2021:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Dollars in thousands)	2022		2021		2022		2021
Derivative - interest rate swaps:
Interest income (loss)	$	498	$	(3,302)	$	433	$	(6,719)
Hedged items - loans:
Interest loss	(35)		(14)		(48)		(29)
Net increase (decrease) in interest income	$	463	$	(3,316)	$	385	$	(6,748)

The following table presents the fair value of the Company’s interest rate swaps, as well as their classification in the consolidated statements of financial condition as of June 30, 2022 and December 31, 2021:

			Fair Values of Derivative Instruments
			Asset Derivatives			Liability Derivatives
(Dollars in thousands)	Notional Amount		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
As of June 30, 2022:
Interest Rate Swaps	$	950,000	Prepaid Expenses and Other Assets	$	16,271	Other Liabilities and Accrued Expenses	$	32
As of December 31, 2021:
Interest Rate Swaps	$	650,000	Prepaid Expenses and Other Assets	$	3,108	Other Liabilities and Accrued Expenses	$	—

As of June 30, 2022 and December 31, 2021, the following amounts were recorded in the consolidated statements of financial condition related to cumulative basis adjustments for its fair value hedges:

Line Item in the Consolidated Statements of Financial Condition in Which the Hedged Items are Included (1)	Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
(Dollars in thousands)
As of June 30, 2022:
Loans receivable, net	$	933,711	$	(16,289)
As of December 31, 2021:
Loans receivable, net	$	646,890	$	(3,110)

(1) These amounts include the amortized cost basis of portfolio loans used to designate hedging relationships in which the hedged items are the last layer expected to be remaining at the end of the hedging relationship. At June 30, 2022 and December 31, 2021, the amortized cost basis of the portfolio loans used in these hedging relationships were $1.4 billion and $1.0 billion, respectively.

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STOCK BASED COMPENSATION

6 Months Ended

Jun. 30, 2022

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

All RSAs and RSUs are granted at the fair value of the common stock at the time of the award. RSAs and RSUs are considered fixed awards as the number of shares and fair value are known at the date of grant and the fair value at the grant date is amortized over the vesting and/or service period. Non-cash stock compensation expense recognized for RSAs for the three and six months ended June 30, 2022 totaled $616 thousand and $1.3 million, respectively, compared with $651 thousand and $1.2 million for the three and six months ended June 30, 2021, respectively The fair value of RSAs and RSUs that vested during the six months ended June 30, 2022 and 2021 totaled $2.6 million and $2.4 million, respectively. No RSAs or RSUs vested during the three months ended June 30, 2022 or 2021.

As of June 30, 2022 and December 31, 2021, there was $3.6 million and $2.6 million, respectively, of unrecognized compensation expense related to 411,592 and 489,703 unvested RSAs, respectively, which amounts were expected to be expensed over a weighted average period of 1.88 years and 1.69 years,

respectively. As of June 30, 2022 and December 31, 2021, 84,727 and 91,486 shares, respectively, of RSUs were vested and remain unsettled per the original deferral elections.

The following table summarizes share information about RSAs and RSUs:

	Six Months Ended June 30,
	2022			2021
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Beginning of the period balance	581,189	$	10.56	605,916	$	10.93
Shares granted	206,675	13.81		289,473	10.11
Shares settled	(253,706)	10.45		(265,655)	11.02
Shares forfeited	(37,839)	11.97		(52,798)	10.26
End of the period balance	496,319	$	11.86	576,936	$	10.53

Under its Omnibus Plan, the Company reserved 3,360,000 shares of common stock for new awards. At June 30, 2022 and December 31, 2021, there were 1,692,508 and 1,861,344 shares, respectively, of common stock reserved and available for grant through restricted stock or other awards under the Omnibus Plan. RSU awards were initially issued to replace unvested phantom stock awards under the Luther Burbank Corporation Phantom Stock Plan and were excluded from the shares reserved and available for grant under the Omnibus Plan. As of January 1, 2021, all RSUs were fully vested and no longer subject to forfeiture.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

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

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

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

Loans were valued using the exit price notion. The fair value was estimated using market quotes for similar assets or the present value of future cash flows, discounted using a market rate for similar products and giving consideration to estimated prepayment risk and credit risk. The fair value of loans was determined utilizing estimates resulting in a Level 3 classification.

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

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

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

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

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

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

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

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

Fair Value of Financial Instruments

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

					Fair Level Measurements Using
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
As of June 30, 2022:
Financial assets:
Cash and cash equivalents	$	86,548	$	86,548	$	86,548	$	—	$	—
Debt securities:
Available for sale	661,432		661,432		—		661,432		—
Held to maturity	3,162		3,067		—		3,067		—
Equity securities	10,772		10,772		—		10,772		—
Loans receivable, net	6,602,294		6,584,788		—		—		6,584,788
Accrued interest receivable	19,297		19,297		3		1,148		18,146
FHLB stock	27,874		N/A		N/A		N/A		N/A
Interest rate swaps	16,271		16,271		—		16,271		—
Financial liabilities:
Deposits	$	5,668,759	$	5,636,060	$	3,143,363	$	2,492,697	$	—
FHLB advances	954,947		954,909		—		954,909		—
Junior subordinated deferrable interest debentures	61,857		51,290		—		51,290		—
Senior debt	94,724		94,194		—		94,194		—
Accrued interest payable	276		276		—		276		—
Interest rate swap	32		32		—		32		—
As of December 31, 2021:
Financial assets:
Cash and cash equivalents	$	138,413	$	138,413	$	138,413	$	—	$	—
Debt securities:
Available for sale	647,317		647,317		—		647,317		—
Held to maturity	3,829		4,018		—		4,018		—
Equity securities	11,693		11,693		—		11,693		—
Loans receivable, net	6,261,885		6,297,548		—		—		6,297,548
Accrued interest receivable	17,761		17,761		1		927		16,833
FHLB stock	23,411		N/A		N/A		N/A		N/A
Interest rate swaps	3,108		3,108		—		3,108		—
Financial liabilities:
Deposits	$	5,538,243	$	5,541,417	$	2,918,102	$	2,623,315	$	—
FHLB advances	751,647		755,981		—		755,981		—
Junior subordinated deferrable interest debentures	61,857		61,545		—		61,545		—
Senior debt	94,662		103,361		—		103,361		—
Accrued interest payable	118		118		—		118		—

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 table presents information about the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis as of June 30, 2022 and December 31, 2021.

Recurring Basis

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

(Dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
As of June 30, 2022:
Financial Assets:
Available for sale debt securities:
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	401,175	$	—	$	401,175	$	—
Residential MBS and CMOs	208,432		—		208,432		—
Agency bonds	25,801		—		25,801		—
Other ABS	26,024		—		26,024		—
Total available for sale debt securities	$	661,432	$	—	$	661,432	$	—
Equity securities	$	10,772	$	—	$	10,772	$	—
Mortgage servicing rights	779		—		—		779
Interest rate swaps	16,271		—		16,271		—
Financial Liabilities:
Interest rate swap	$	32	$	—	$	32	$	—
As of December 31, 2021:
Financial Assets:
Available for sale debt securities:
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	407,746	$	—	$	407,746	$	—
Residential MBS and CMOs	200,133		—		200,133		—
Agency bonds	10,831		—		10,831		—
Other ABS	28,607		—		28,607		—
Total available for sale debt securities	$	647,317	$	—	$	647,317	$	—
Equity securities	$	11,693	$	—	$	11,693	$	—
Mortgage servicing rights	915		—		—		915
Interest rate swaps	3,108		—		3,108		—

There were no transfers between Level 1 and Level 2 during the three and six months ended June 30, 2022 or 2021.

Non-recurring Basis

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

At both June 30, 2022 and December 31, 2021, there were no assets or liabilities measured at fair value on a non-recurring basis and the Company held no other real estate owned

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VARIABLE INTEREST ENTITIES (VIE)

6 Months Ended

Jun. 30, 2022

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. The Company evaluated its association with VIEs for consolidation purposes. Specifically, a VIE is to be consolidated by its primary

beneficiary, the entity that has both the power to direct the activities that most significantly impact the VIE, and a variable interest that could potentially be significant to the VIE. A variable interest is a contractual, ownership or other interest whose value fluctuates with the changes in the value of the VIE's assets and liabilities. The assessment includes an evaluation of the Company's continuing involvement with the VIE and the nature and significance of its variable interests.

Multifamily loan securitization

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

The Company believes its maximum exposure to loss as a result of involvement with the VIE associated with the securitization under the reimbursement agreement executed with Freddie Mac is 10% of the original principal amount of the loans comprising the securitization pool, or $62.6 million. The reserve for estimated losses with respect to the reimbursement obligation totaled $542 thousand and $727 thousand as of June 30, 2022 and December 31, 2021, respectively, based upon an analysis of quantitative and qualitative data of the underlying loans included in the securitization pool. No disbursements have been made in connection with the reimbursement obligation.

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LOAN SALE AND SECURITIZATION ACTIVITIES

6 Months Ended

Jun. 30, 2022

Transfers and Servicing [Abstract]

LOAN SALE AND SECURITIZATION ACTIVITIES

LOAN SALE AND SECURITIZATION ACTIVITIES

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

As sub-servicer for Freddie Mac, the Bank is required to maintain a minimum net worth in accordance with GAAP of not less than $2.0 million. If the Bank's capital were to fall below this threshold, Freddie Mac would have the authority to terminate and assume the Bank’s sub-servicing duties. At June 30, 2022, the Bank’s net worth was $814.9 million which equates to its Tier 1 capital of $832.9 million plus goodwill of $3.3 million and accumulated other comprehensive loss related to net unrealized losses on available for sale securities of $21.3 million.

General representations and warranties associated with loan sales and the securitization transaction require the Company to uphold various assertions that pertain to the underlying loans at the time of the transaction, including, but not limited to, compliance with relevant laws and regulations, absence of fraud, enforcement of liens, no environmental damages, and maintenance of relevant environmental insurance. Such representations and warranties are limited to those that do not meet the quality represented at the transaction date and do not pertain to a decline in value or future payment defaults. In circumstances

where the Company breaches its representations and warranties, the Company would generally be required to cure such instances through a repurchase or substitution of the subject loan(s).

With respect to the securitization transaction, the Company also has continuing involvement through a reimbursement agreement executed with Freddie Mac. To the extent the ultimate resolution of defaulted loans results in contractual principal and interest payments that are deficient, the Company is obligated to reimburse Freddie Mac for such amounts, not to exceed 10% of the original principal amount of the loans comprising the securitization pool at the closing date of September 27, 2017.

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

	Three Months Ended June 30,		Six Months Ended June 30,
(Dollars in thousands)	2022	2021	2022	2021
Servicing fees	89	147	186	317

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

(Dollars in thousands)	Single Family Residential		Multifamily Residential
As of June 30, 2022:
Principal balance of loans	$	11,414	$	131,109
Loans 90+ days past due	—		—
Charge-offs, net	—		—
As of December 31, 2021:
Principal balance of loans	$	12,243	$	173,486
Loans 90+ days past due	—		—
Charge-offs, net	—		—

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2022

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

Commitments to fund loans and lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have expiration dates or other termination clauses. In addition, external market forces may impact the probability of commitments being exercised; therefore, total commitments outstanding do not necessarily represent future cash requirements.

At June 30, 2022 and December 31, 2021, the Company had outstanding commitments of approximately $162.7 million and $132.8 million, respectively, for loans and lines of credit. Unfunded commitment reserves totaled $118 thousand and $153 thousand at June 30, 2022 and December 31, 2021, respectively.

Contingencies

At present, there are no pending or threatened proceedings against the Company which, if determined adversely, would have a material effect on the Company’s business, financial position, results of operations or cash flows. In the ordinary course of operations, the Company may be party to various legal proceedings.

Correspondent Banking Agreements

The Company maintains funds on deposit with other federally insured financial institutions under correspondent banking agreements. Insured portions of these balances are limited to $250 thousand per institution based on FDIC insurance limits. At both June 30, 2022 and December 31, 2021, the Company had $25.5 million in uninsured available cash balances. The Company also has established federal funds lines of credit with correspondent banks totaling $50.0 million at both June 30, 2022 and December 31, 2021, none of which were advanced at those dates. The Company periodically monitors the financial condition and capital adequacy of these correspondent banks.

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NATURE OF OPERATIONS (Policies)

6 Months Ended

Jun. 30, 2022

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, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 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 six months ended June 30, 2022 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2022.

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

Use of Estimates

Use of EstimatesManagement 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.

Earnings Per Share

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.

New Financial Accounting Standards

Adoption of New Financial Accounting Standards

FASB ASU 2016-13

In June 2016, the Financial Accounting Standards Board ("FASB") issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss ("CECL") model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held to maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. The transition will be applied as follows:

-    For debt securities with other than temporary impairment ("OTTI"), the guidance will be applied prospectively.

-    Existing purchased credit impaired ("PCI") assets will be grandfathered and classified as purchased credit deteriorated ("PCD") assets at the date of adoption. The assets will be grossed up for the allowance for expected credit losses for all PCD assets at the date of adoption and will continue to recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date. Subsequent changes in expected credit losses will be recorded through the allowance.

-    For all other assets within the scope of CECL, a cumulative-effect adjustment will be recognized in retained earnings as of the beginning of the first reporting period in which the guidance is effective.

These amendments are effective for PBEs that are SEC filers for annual periods and interim periods within those annual periods beginning after December 15, 2019. As an emerging growth company, the Company expects to adopt this guidance on January 1, 2023. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective.

Through June 30, 2022, CECL implementation activities have generally focused on capturing and validating loan data, segmenting the loan portfolio, evaluating credit loss methodologies and models, as well as evaluating model results and sensitivities. In determining an expected allowance under CECL, the Company has selected a credit loss model that utilizes an approach focused on a loan's probability of default and loss given default. As part of the process to test and refine our CECL model, the Company has completed quarterly model runs for analysis and backtesting purposes starting with the third quarter of 2018. This process has been on-going and will continue until our adoption date. Continuing implementation activities include the completion of a third party model validation, refining qualitative factor adjustments, finalizing policies and disclosures and evaluating, documenting and testing internal controls. We estimate that the adoption of the CECL standard would not currently result in a material change in our allowance for credit losses, which, if necessary, will be recorded as a cumulative-effect adjustment to retained earnings, net of tax as of January 1, 2023. The ultimate impact will depend on the portfolio and forecasts when the standard is adopted.

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

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

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

Loans were valued using the exit price notion. The fair value was estimated using market quotes for similar assets or the present value of future cash flows, discounted using a market rate for similar products and giving consideration to estimated prepayment risk and credit risk. The fair value of loans was determined utilizing estimates resulting in a Level 3 classification.

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

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

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

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

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

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

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

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

Derivatives

Any gain or loss on the derivatives, as well as any offsetting loss or gain on the hedged items attributable to the hedged risk are recognized in interest income on loans.

Leases

The Company includes lease extension options in the lease term if it is reasonably certain the Company will exercise the option, when considering the economic incentive to do so. Leases are classified as operating or finance leases at the lease commencement date. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. All of the Company’s leases are classified as operating leases and prior to the adoption of ASU 2016-02 on January 1, 2022, were not recognized on the Company's consolidated statements of financial condition. Upon adoption of the new lease standard on January 1, 2022, the Company recorded operating lease right-of-use assets and operating lease liabilities on the Company's consolidated statements of financial condition. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.The Company uses its incremental borrowing rate at lease commencement to discount lease payments when the rate implicit in the lease is not readily determinable. The Company's incremental borrowing rate is based on the FHLB advance rate based on the lease term and other factors. In addition, the Company has elected to account for any non-lease components in its leases as part of the associated lease component. The Company also has elected to not recognize short-term leases with an original term of 12 months or less on the Company's consolidated statements of financial condition.

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NATURE OF OPERATIONS (Tables)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

(Dollars in thousands, except share amounts)	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	22,567	$	21,216	$	45,507	$	39,627
Weighted average basic common shares outstanding	50,794,950		51,726,331		51,066,219		51,854,531
Add: Dilutive effects of assumed vesting of restricted stock	112,312		134,802		94,621		125,155
Weighted average diluted common shares outstanding	50,907,262		51,861,133		51,160,840		51,979,686
Income per common share:
Basic EPS	$	0.44	$	0.41	$	0.89	$	0.76
Diluted EPS	$	0.44	$	0.41	$	0.89	$	0.76
Anti-dilutive shares not included in calculation of diluted earnings per share	1,359		—		433		2,706

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INVESTMENT SECURITIES (Tables)

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Schedule of Debt Securities, Available-for-sale

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

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
At June 30, 2022:
Government and Government Sponsored Entities:
Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")	$	416,134	$	1,468	$	(16,427)	$	401,175
Residential MBS and CMOs	222,336		129		(14,033)		208,432
Agency bonds	25,576		225		—		25,801
Other asset backed securities ("ABS")	27,377		—		(1,353)		26,024
Total available for sale debt securities	$	691,423	$	1,822	$	(31,813)	$	661,432
At December 31, 2021:
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	407,111	$	3,281	$	(2,646)	$	407,746
Residential MBS and CMOs	200,775		1,225		(1,867)		200,133
Agency bonds	10,587		244		—		10,831
Other ABS	28,720		37		(150)		28,607
Total available for sale debt securities	$	647,193	$	4,787	$	(4,663)	$	647,317

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:

	June 30, 2022
	Less than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	152,632	$	(8,905)	$	71,739	$	(7,522)	$	224,371	$	(16,427)
Residential MBS and CMOs	153,853		(9,659)		26,193		(4,374)		180,046		(14,033)
Other ABS	26,024		(1,353)		—		—		26,024		(1,353)
Total available for sale debt securities	$	332,509	$	(19,917)	$	97,932	$	(11,896)	$	430,441	$	(31,813)

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

Schedule of Held-to-maturity Securities

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 Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Estimated Fair Value
As of June 30, 2022:
Government Sponsored Entities:
Residential MBS	$	3,097	$	—	$	(95)	$	3,002
Other investments	65		—		—		65
Total held to maturity investment securities	$	3,162	$	—	$	(95)	$	3,067
As of December 31, 2021:
Government Sponsored Entities:
Residential MBS	$	3,761	$	189	$	—	$	3,950
Other investments	68		—		—		68
Total held to maturity investment securities	$	3,829	$	189	$	—	$	4,018

The following table summarizes the gross unrecognized losses and fair value of held to maturity investment securities, aggregated by investment category and length of time that individual securities have been in a continuous unrecognized loss position:

	Less than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses
As of June 30, 2022:
Government Sponsored Entities:
Residential MBS	$	3,002	$	(95)	$	—	$	—	$	3,002	$	(95)

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, 2022:

	June 30, 2022
(Dollars in thousands)	Amortized Cost		Fair Value
Available for sale debt securities
Five to ten years	$	25,576	$	25,801
MBS, CMOs and other ABS	665,847		635,631
Total available for sale debt securities	$	691,423	$	661,432
Held to maturity investments securities
Five to ten years	$	65	$	65
MBS	3,097		3,002
Total held to maturity debt securities	$	3,162	$	3,067

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LOANS (Tables)

6 Months Ended

Jun. 30, 2022

Receivables [Abstract]

Schedule of Loans Receivable

Loans consist of the following:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Permanent mortgages on:
Multifamily residential	$	4,414,725	$	4,210,735
Single family residential	2,011,374		1,881,676
Commercial real estate	184,708		187,097
Land and construction loans	27,022		17,912
Total	6,637,829		6,297,420
Allowance for loan losses	(35,535)		(35,535)
Loans held for investment, net	$	6,602,294	$	6,261,885

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)	Multifamily Residential		Single Family Residential		Commercial Real Estate		Land and Construction		Total
Three months ended June 30, 2022
Allowance for loan losses:
Beginning balance allocated to portfolio segments	$	24,151	$	6,797	$	1,882	$	205	$	33,035
Provision for (reversal of) loan losses	1,856		828		(209)		25		2,500
Charge-offs	—		—		—		—		—
Recoveries	—		—		—		—		—
Ending balance allocated to portfolio segments	$	26,007	$	7,625	$	1,673	$	230	$	35,535
Three months ended June 30, 2021
Allowance for loan losses:
Beginning balance allocated to portfolio segments	$	30,838	$	9,816	$	2,871	$	241	$	43,766
Reversal of provision for loan losses	(724)		(1,546)		(166)		(64)		(2,500)
Charge-offs	—		—		—		—		—
Recoveries	—		62		—		7		69
Ending balance allocated to portfolio segments	$	30,114	$	8,332	$	2,705	$	184	$	41,335
Six months ended June 30, 2022
Allowance for loan losses:
Beginning balance allocated to portfolio segments	$	26,043	$	7,224	$	2,094	$	174	$	35,535
(Reversal of) provision for loan losses	(36)		401		(421)		56		—
Charge-offs	—		—		—		—		—
Recoveries	—		—		—		—		—
Ending balance allocated to portfolio segments	$	26,007	$	7,625	$	1,673	$	230	$	35,535
Six months ended June 30, 2021
Allowance for loan losses:
Beginning balance allocated to portfolio segments	$	33,259	$	9,372	$	3,347	$	236	$	46,214
Reversal of provision for loan losses	(3,145)		(1,104)		(642)		(109)		(5,000)
Charge-offs	—		—		—		—		—
Recoveries	—		64		—		57		121
Ending balance allocated to portfolio segments	$	30,114	$	8,332	$	2,705	$	184	$	41,335

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

(Dollars in thousands)	Multifamily Residential		Single Family Residential		Commercial Real Estate		Land and Construction		Total
As of June 30, 2022:
Ending allowance balance allocated to:
Loans individually evaluated for impairment	$	—	$	25	$	—	$	—	$	25
Loans collectively evaluated for impairment	26,007		7,600		1,673		230		35,510
Ending balance	$	26,007	$	7,625	$	1,673	$	230	$	35,535
Loans:
Ending balance: individually evaluated for impairment	$	852	$	8,012	$	—	$	—	$	8,864
Ending balance: collectively evaluated for impairment	4,413,873		2,003,362		184,708		27,022		6,628,965
Ending balance	$	4,414,725	$	2,011,374	$	184,708	$	27,022	$	6,637,829
As of December 31, 2021:
Ending allowance balance allocated to:
Loans individually evaluated for impairment	$	—	$	25	$	—	$	—	$	25
Loans collectively evaluated for impairment	26,043		7,199		2,094		174		35,510
Ending balance	$	26,043	$	7,224	$	2,094	$	174	$	35,535
Loans:
Ending balance: individually evaluated for impairment	$	505	$	5,687	$	—	$	—	$	6,192
Ending balance: collectively evaluated for impairment	4,210,230		1,875,989		187,097		17,912		6,291,228
Ending balance	$	4,210,735	$	1,881,676	$	187,097	$	17,912	$	6,297,420

Schedule of Loan Portfolio by Internal Risk Indicators

The following table summarizes the loan portfolio allocated by management’s internal risk ratings at June 30, 2022 and December 31, 2021.

(Dollars in thousands)	Multifamily Residential		Single Family Residential		Commercial Real Estate		Land, Construction and NM		Total
As of June 30, 2022:
Grade:
Pass	$	4,360,690	$	1,993,279	$	180,522	$	27,022	$	6,561,513
Watch	31,663		13,917		3,223		—		48,803
Special mention	4,058		—		963		—		5,021
Substandard	18,314		4,178		—		—		22,492
Total	$	4,414,725	$	2,011,374	$	184,708	$	27,022	$	6,637,829
As of December 31, 2021:
Grade:
Pass	$	4,129,767	$	1,856,942	$	180,950	$	17,523	$	6,185,182
Watch	66,062		22,946		6,147		389		95,544
Special mention	4,586		—		—		—		4,586
Substandard	10,320		1,788		—		—		12,108
Total	$	4,210,735	$	1,881,676	$	187,097	$	17,912	$	6,297,420

Schedule or Past Due Loans Receivable

The following table summarizes an aging analysis of the loan portfolio by the time past due at June 30, 2022 and December 31, 2021:

(Dollars in thousands)	30 Days		60 Days		90+ Days		Non-accrual		Current		Total
As of June 30, 2022:
Loans:
Multifamily residential	$	2,957	$	—	$	—	$	852	$	4,410,916	$	4,414,725
Single family residential	359		—		—		4,178		2,006,837		2,011,374
Commercial real estate	—		—		—		—		184,708		184,708
Land and construction	—		—		—		—		27,022		27,022
Total	$	3,316	$	—	$	—	$	5,030	$	6,629,483	$	6,637,829
As of December 31, 2021:
Loans:
Multifamily residential	$	—	$	—	$	—	$	505	$	4,210,230	$	4,210,735
Single family residential	271		—		—		1,788		1,879,617		1,881,676
Commercial real estate	—		—		—		—		187,097		187,097
Land and construction	—		—		—		—		17,912		17,912
Total	$	271	$	—	$	—	$	2,293	$	6,294,856	$	6,297,420

Schedule of Impaired Loans Receivables

The following table summarizes information related to impaired loans at June 30, 2022 and December 31, 2021:

	As of June 30, 2022						As of December 31, 2021
(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Multifamily residential	$	852	$	927	$	—	$	505	$	582	$	—
Single family residential	7,192		7,384		—		4,847		5,033		—
	8,044		8,311		—		5,352		5,615		—
With an allowance recorded:
Single family residential	820		817		25		840		836		25
	820		817		25		840		836		25
Total:
Multifamily residential	852		927		—		505		582		—
Single family residential	8,012		8,201		25		5,687		5,869		25
	$	8,864	$	9,128	$	25	$	6,192	$	6,451	$	25

The following tables summarize information related to impaired loans for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,
	2022						2021
(Dollars in thousands)	Average Recorded Investment		Interest Income		Cash Basis Interest		Average Recorded Investment		Interest Income		Cash Basis Interest
With no related allowance recorded:
Multifamily residential	$	767	$	17	$	17	$	908	$	8	$	8
Single family residential	6,219		37		10		4,872		50		28
	6,986		54		27		5,780		58		36
With an allowance recorded:
Single family residential	825		6		—		863		6		—
	825		6		—		863		6		—
Total:
Multifamily residential	767		17		17		908		8		8
Single family residential	7,044		43		10		5,735		56		28
	$	7,811	$	60	$	27	$	6,643	$	64	$	36

	Six Months Ended June 30,
	2022						2021
(Dollars in thousands)	Average Recorded Investment		Interest Income		Cash Basis Interest		Average Recorded Investment		Interest Income		Cash Basis Interest
With no related allowance recorded:
Multifamily residential	$	654	$	25	$	25	$	967	$	14	$	14
Single family residential	5,626		80		29		5,431		111		85
	6,280		105		54		6,398		125		99
With an allowance recorded:
Single family residential	830		12		—		868		13		—
	830		12		—		868		13		—
Total:
Multifamily residential	654		25		25		967		14		14
Single family residential	6,456		92		29		6,299		124		85
	$	7,110	$	117	$	54	$	7,266	$	138	$	99

Schedule of Troubled Debt Restructurings

The following table summarizes the recorded investment related to troubled debt restructurings ("TDRs") at June 30, 2022 and December 31, 2021:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Troubled debt restructurings:
Single family residential	$	1,592	$	1,204

During the six months ended June 30, 2022, the Company modified the terms of one loan that qualified as a TDR. The following table provides details of this modification:

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

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NONPERFORMING ASSETS (Tables)

6 Months Ended

Jun. 30, 2022

Receivables [Abstract]

Schedule of Nonperforming Assets

The Company’s nonperforming assets at June 30, 2022 and December 31, 2021 are indicated below:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Non-accrual loans:
Multifamily residential	$	852	$	505
Single family residential	4,178		1,788
Total non-accrual loans	5,030		2,293
Real estate owned	—		—
Total nonperforming assets	$	5,030	$	2,293

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MORTGAGE SERVICING RIGHTS (Tables)

6 Months Ended

Jun. 30, 2022

Transfers and Servicing [Abstract]

Schedule of Mortgage Loans Serviced for Others

The principal balances of these loans are as follows:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Mortgage loans serviced for:
Federal Home Loan Mortgage Corporation ("Freddie Mac")	$	93,840	$	127,431
Other financial institutions	48,683		58,298
Total mortgage loans serviced for others	$	142,523	$	185,729

Schedule of Changes in Servicing Assets

Activities for mortgage servicing rights are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2022		2021		2022		2021
Beginning balance	$	811	$	1,428	$	915	$	1,599
Additions	—		—		—		—
Disposals	—		—		—		—
Changes in fair value due to changes in assumptions	—		—		—		—
Other changes in fair value	(32)		(236)		(136)		(407)
Ending balance	$	779	$	1,192	$	779	$	1,192

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LEASES (Tables)

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Schedule of Supplemental Lease Information

Supplemental lease information as of or for the three and six months ended June 30, 2022 is as follows:

(Dollars in thousands)	June 30, 2022
Operating lease right-of-use assets included in prepaid expenses and other assets	$	15,393
Operating lease liabilities included in other liabilities and accrued expenses	$	15,682
Weighted average remaining lease term (years) of operating leases	4.9
Weighted average discount rate of operating leases	1.88		%

(Dollars in thousands)	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
Operating lease costs included in occupancy expense	$	910	$	1,839
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,014	$	2,051

Schedule of Future Undiscounted Lease Payments

At June 30, 2022, future undiscounted lease payments with initial terms of one year or more are as follows:

(Dollars in thousands)
July 1 - December 31, 2022	$	1,942
2023	3,719
2024	3,013
2025	2,594
2026	2,398
Thereafter	2,841
Total undiscounted lease payments	16,507
Less: Imputed interest	(825)
Net lease liabilities	$	15,682

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DEPOSITS (Tables)

6 Months Ended

Jun. 30, 2022

Deposits [Abstract]

Schedule of Deposits

A summary of deposits at June 30, 2022 and December 31, 2021 is as follows:

(Dollars in thousands)	June 30, 2022		December 31, 2021
Money market savings	$	2,353,150	$	2,294,367
Time deposits	2,240,395		2,335,141
Money market checking	671,310		580,325
Interest-bearing demand	230,587		176,126
Noninterest-bearing demand	173,317		152,284
Total	$	5,668,759	$	5,538,243

Schedule of Certificate Account Maturities

Maturities of the Company’s time deposits at June 30, 2022 are summarized as follows:

(Dollars in thousands)
July 1 - December 31, 2022	$	1,355,883
2023	732,749
2024	95,164
2025	7,830
2026	41,073
Thereafter	7,696
Total	$	2,240,395

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FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES (Tables)

6 Months Ended

Jun. 30, 2022

Advance from Federal Home Loan Bank [Abstract]

Schedule of FHLB Advances

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

	Outstanding Balances				As of June 30, 2022
(Dollars in thousands)	June 30, 2022		December 31, 2021		Minimum Interest Rate		Maximum Interest Rate		Weighted Average Rate		Maturity Dates
Fixed rate short-term	$	153,300	$	—	1.66	%	1.75	%	1.70	%	July 2022
Fixed rate long-term	801,647		751,647		0.38	%	7.33	%	1.81	%	March 2023 to March 2030
	$	954,947	$	751,647

The following table summarizes scheduled principal payments on FHLB advances over the next five years as of June 30, 2022:

(Dollars in thousands)
July 1 - December 31, 2022	$	153,300
2023	250,000
2024	350,000
2025	101,500
2026	100,000
Thereafter	147
	$	954,947

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JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Outstanding Trust Securities

The following table is a summary of the outstanding Trust Securities and Notes at June 30, 2022 and December 31, 2021:

	June 30, 2022				December 31, 2021				Date	Maturity	Rate Index
Issuer	Amount		Rate		Amount		Rate		Issued	Date	(Quarterly Reset)
(Dollars in thousands)
Luther Burbank Statutory Trust I	$	41,238	3.21	%	$	41,238	1.58	%	3/1/2006	6/15/2036	3 month LIBOR + 1.38%
Luther Burbank Statutory Trust II	$	20,619	3.45	%	$	20,619	1.82	%	3/1/2007	6/15/2037	3 month LIBOR + 1.62%

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SENIOR DEBT (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Debt

The following table summarizes information on these notes as of June 30, 2022 and December 31, 2021:

	June 30, 2022				December 31, 2021
(Dollars in thousands)	Principal		Unamortized Debt Issuance Costs		Principal		Unamortized Debt Issuance Costs		Maturity Date	Fixed Interest Rate
Senior Unsecured Term Notes	$	95,000	$	276	$	95,000	$	338	9/30/2024	6.50	%

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DERIVATIVES AND HEDGING ACTIVITIES (Tables)

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Swap on the Consolidated Statements of Income

The following table presents the effect of the Company’s interest rate swaps on the unaudited consolidated statements of income for the three and six months ended June 30, 2022 and 2021:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Dollars in thousands)	2022		2021		2022		2021
Derivative - interest rate swaps:
Interest income (loss)	$	498	$	(3,302)	$	433	$	(6,719)
Hedged items - loans:
Interest loss	(35)		(14)		(48)		(29)
Net increase (decrease) in interest income	$	463	$	(3,316)	$	385	$	(6,748)

Schedule of Interest Rate Swap on Consolidated Balance Sheet

The following table presents the fair value of the Company’s interest rate swaps, as well as their classification in the consolidated statements of financial condition as of June 30, 2022 and December 31, 2021:

			Fair Values of Derivative Instruments
			Asset Derivatives			Liability Derivatives
(Dollars in thousands)	Notional Amount		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
As of June 30, 2022:
Interest Rate Swaps	$	950,000	Prepaid Expenses and Other Assets	$	16,271	Other Liabilities and Accrued Expenses	$	32
As of December 31, 2021:
Interest Rate Swaps	$	650,000	Prepaid Expenses and Other Assets	$	3,108	Other Liabilities and Accrued Expenses	$	—

Schedule of Amounts Recorded on the Balance Sheet Related to Cumulative Adjustments on Fair Value Hedges

As of June 30, 2022 and December 31, 2021, the following amounts were recorded in the consolidated statements of financial condition related to cumulative basis adjustments for its fair value hedges:

Line Item in the Consolidated Statements of Financial Condition in Which the Hedged Items are Included (1)	Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
(Dollars in thousands)
As of June 30, 2022:
Loans receivable, net	$	933,711	$	(16,289)
As of December 31, 2021:
Loans receivable, net	$	646,890	$	(3,110)

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STOCK BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Restricted Stock Activity

The following table summarizes share information about RSAs and RSUs:

	Six Months Ended June 30,
	2022			2021
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Beginning of the period balance	581,189	$	10.56	605,916	$	10.93
Shares granted	206,675	13.81		289,473	10.11
Shares settled	(253,706)	10.45		(265,655)	11.02
Shares forfeited	(37,839)	11.97		(52,798)	10.26
End of the period balance	496,319	$	11.86	576,936	$	10.53

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Assets and Liabilities

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

					Fair Level Measurements Using
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
As of June 30, 2022:
Financial assets:
Cash and cash equivalents	$	86,548	$	86,548	$	86,548	$	—	$	—
Debt securities:
Available for sale	661,432		661,432		—		661,432		—
Held to maturity	3,162		3,067		—		3,067		—
Equity securities	10,772		10,772		—		10,772		—
Loans receivable, net	6,602,294		6,584,788		—		—		6,584,788
Accrued interest receivable	19,297		19,297		3		1,148		18,146
FHLB stock	27,874		N/A		N/A		N/A		N/A
Interest rate swaps	16,271		16,271		—		16,271		—
Financial liabilities:
Deposits	$	5,668,759	$	5,636,060	$	3,143,363	$	2,492,697	$	—
FHLB advances	954,947		954,909		—		954,909		—
Junior subordinated deferrable interest debentures	61,857		51,290		—		51,290		—
Senior debt	94,724		94,194		—		94,194		—
Accrued interest payable	276		276		—		276		—
Interest rate swap	32		32		—		32		—
As of December 31, 2021:
Financial assets:
Cash and cash equivalents	$	138,413	$	138,413	$	138,413	$	—	$	—
Debt securities:
Available for sale	647,317		647,317		—		647,317		—
Held to maturity	3,829		4,018		—		4,018		—
Equity securities	11,693		11,693		—		11,693		—
Loans receivable, net	6,261,885		6,297,548		—		—		6,297,548
Accrued interest receivable	17,761		17,761		1		927		16,833
FHLB stock	23,411		N/A		N/A		N/A		N/A
Interest rate swaps	3,108		3,108		—		3,108		—
Financial liabilities:
Deposits	$	5,538,243	$	5,541,417	$	2,918,102	$	2,623,315	$	—
FHLB advances	751,647		755,981		—		755,981		—
Junior subordinated deferrable interest debentures	61,857		61,545		—		61,545		—
Senior debt	94,662		103,361		—		103,361		—
Accrued interest payable	118		118		—		118		—

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:

(Dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
As of June 30, 2022:
Financial Assets:
Available for sale debt securities:
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	401,175	$	—	$	401,175	$	—
Residential MBS and CMOs	208,432		—		208,432		—
Agency bonds	25,801		—		25,801		—
Other ABS	26,024		—		26,024		—
Total available for sale debt securities	$	661,432	$	—	$	661,432	$	—
Equity securities	$	10,772	$	—	$	10,772	$	—
Mortgage servicing rights	779		—		—		779
Interest rate swaps	16,271		—		16,271		—
Financial Liabilities:
Interest rate swap	$	32	$	—	$	32	$	—
As of December 31, 2021:
Financial Assets:
Available for sale debt securities:
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	407,746	$	—	$	407,746	$	—
Residential MBS and CMOs	200,133		—		200,133		—
Agency bonds	10,831		—		10,831		—
Other ABS	28,607		—		28,607		—
Total available for sale debt securities	$	647,317	$	—	$	647,317	$	—
Equity securities	$	11,693	$	—	$	11,693	$	—
Mortgage servicing rights	915		—		—		915
Interest rate swaps	3,108		—		3,108		—

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:

(Dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
As of June 30, 2022:
Financial Assets:
Available for sale debt securities:
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	401,175	$	—	$	401,175	$	—
Residential MBS and CMOs	208,432		—		208,432		—
Agency bonds	25,801		—		25,801		—
Other ABS	26,024		—		26,024		—
Total available for sale debt securities	$	661,432	$	—	$	661,432	$	—
Equity securities	$	10,772	$	—	$	10,772	$	—
Mortgage servicing rights	779		—		—		779
Interest rate swaps	16,271		—		16,271		—
Financial Liabilities:
Interest rate swap	$	32	$	—	$	32	$	—
As of December 31, 2021:
Financial Assets:
Available for sale debt securities:
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	407,746	$	—	$	407,746	$	—
Residential MBS and CMOs	200,133		—		200,133		—
Agency bonds	10,831		—		10,831		—
Other ABS	28,607		—		28,607		—
Total available for sale debt securities	$	647,317	$	—	$	647,317	$	—
Equity securities	$	11,693	$	—	$	11,693	$	—
Mortgage servicing rights	915		—		—		915
Interest rate swaps	3,108		—		3,108		—

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LOAN SALE AND SECURITIZATION ACTIVITIES (Tables)

6 Months Ended

Jun. 30, 2022

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:

	Three Months Ended June 30,		Six Months Ended June 30,
(Dollars in thousands)	2022	2021	2022	2021
Servicing fees	89	147	186	317

Schedule of Loans Transfered Through Sale or Securitization

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

(Dollars in thousands)	Single Family Residential		Multifamily Residential
As of June 30, 2022:
Principal balance of loans	$	11,414	$	131,109
Loans 90+ days past due	—		—
Charge-offs, net	—		—
As of December 31, 2021:
Principal balance of loans	$	12,243	$	173,486
Loans 90+ days past due	—		—
Charge-offs, net	—		—

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NATURE OF OPERATIONS - Narrative (Details) $ in Thousands	Jun. 30, 2022 USD ($) branch
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets included in prepaid expenses and other assets | $	$ 15,393
Operating lease liabilities included in other liabilities and accrued expenses | $	$ 15,682
Sonoma, Marin, Santa Clara, and Los Angeles Counties
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of full service branches | branch	10
King County, Washington
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of full service branches | branch	1

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NATURE OF OPERATIONS - Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Accounting Policies [Abstract]
Net income	$ 22,567	$ 21,216	$ 45,507	$ 39,627
Weighted average common shares outstanding - basic (in shares)	50,794,950	51,726,331	51,066,219	51,854,531
Add: Dilutive effects of assumed vesting of restricted stock (in shares)	112,312	134,802	94,621	125,155
Weighted average common shares outstanding - diluted (in shares)	50,907,262	51,861,133	51,160,840	51,979,686
Basic earnings per common share (in usd per share)	$ 0.44	$ 0.41	$ 0.89	$ 0.76
Diluted earnings per common share (in usd per share)	$ 0.44	$ 0.41	$ 0.89	$ 0.76
Anti-dilutive shares not included in calculation of diluted earnings per share (in shares)	1,359	0	433	2,706

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INVESTMENT SECURITIES - Available-for-sale Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 691,423	$ 647,193
Gross Unrealized Gains	1,822	4,787
Gross Unrealized Losses	(31,813)	(4,663)
Estimated Fair Value	661,432	647,317
Fair Value
Less than 12 Months	332,509	291,087
12 Months or More	97,932	10,855
Total	430,441	301,942
Unrealized Losses
Less than 12 Months	(19,917)	(4,646)
12 Months or More	(11,896)	(17)
Total	(31,813)	(4,663)
Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	416,134	407,111
Gross Unrealized Gains	1,468	3,281
Gross Unrealized Losses	(16,427)	(2,646)
Estimated Fair Value	401,175	407,746
Fair Value
Less than 12 Months	152,632	157,031
12 Months or More	71,739	10,608
Total	224,371	167,639
Unrealized Losses
Less than 12 Months	(8,905)	(2,632)
12 Months or More	(7,522)	(14)
Total	(16,427)	(2,646)
Residential MBS and CMOs
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	222,336	200,775
Gross Unrealized Gains	129	1,225
Gross Unrealized Losses	(14,033)	(1,867)
Estimated Fair Value	208,432	200,133
Fair Value
Less than 12 Months	153,853	118,803
12 Months or More	26,193	247
Total	180,046	119,050
Unrealized Losses
Less than 12 Months	(9,659)	(1,864)
12 Months or More	(4,374)	(3)
Total	(14,033)	(1,867)
Agency bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	25,576	10,587
Gross Unrealized Gains	225	244
Gross Unrealized Losses	0	0
Estimated Fair Value	25,801	10,831
Other ABS
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	27,377	28,720
Gross Unrealized Gains	0	37
Gross Unrealized Losses	(1,353)	(150)
Estimated Fair Value	26,024	28,607
Fair Value
Less than 12 Months	26,024	15,253
12 Months or More	0	0
Total	26,024	15,253
Unrealized Losses
Less than 12 Months	(1,353)	(150)
12 Months or More	0	0
Total	$ (1,353)	$ (150)

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INVESTMENT SECURITIES - Narrative (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($) security	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) security	Jun. 30, 2021 USD ($)	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($) security	Mar. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Debt Securities, Available-for-sale [Line Items]
Cumulative effect of change in accounting principal | $	$ 671,622,000	$ 638,699,000	$ 671,622,000	$ 638,699,000	$ 668,000,000	$ 669,133,000	$ 623,969,000	$ 613,691,000
Debt securities, available-for-sale, realized gain | $	0	0	0	0
Debt securities, available-for-sale, realized loss | $	0	0	0	0
Equity securities, at fair value | $	$ 10,772,000		$ 10,772,000			$ 11,693,000
Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")
Debt Securities, Available-for-sale [Line Items]
Debt securities, available-for-sale, number of positions	59		59			54
Debt securities, available-for-sale, unrealized loss position, number of positions	34		34			20
Debt securities, available-for-sale, continuous unrealized loss position, 12 months or longer, number of positions	10		10			2
Residential MBS
Debt Securities, Available-for-sale [Line Items]
Debt securities, available-for-sale, number of positions	89		89			88
Debt securities, available-for-sale, unrealized loss position, number of positions	66		66			14
Debt securities, available-for-sale, continuous unrealized loss position, 12 months or longer, number of positions	6		6			4
Held-to-maturity securities, number of positions	7		7
Held-to-maturity securities, unrealized loss position, number of positions	7		7
Held-to-maturity Securities, Unrealized Loss Position 12 Months or More, Number of Positions	0		0
Other ABS
Debt Securities, Available-for-sale [Line Items]
Debt securities, available-for-sale, number of positions	3		3			3
Debt securities, available-for-sale, unrealized loss position, number of positions	3		3			2
Debt securities, available-for-sale, continuous unrealized loss position, 12 months or longer, number of positions	0		0			0
CRA Qualified Investment Fund
Debt Securities, Available-for-sale [Line Items]
Equity securities, at fair value | $	$ 10,800,000		$ 10,800,000			$ 11,700,000
Equity Securities, FV-NI, Realized Gain (Loss) | $	(344,000)	33,000	(921,000)	(178,000)
Accumulated Other Comprehensive (Loss) Income (Net of Taxes) Available for Sale Securities
Debt Securities, Available-for-sale [Line Items]
Cumulative effect of change in accounting principal | $	(21,295,000)	4,393,000	(21,295,000)	4,393,000	(11,958,000)	88,000	4,031,000	6,737,000
Unrealized gain on available-for-sale investment securities tax liability | $	(8,700,000)		(8,700,000)			36,000
Retained Earnings
Debt Securities, Available-for-sale [Line Items]
Cumulative effect of change in accounting principal | $	$ 295,297,000	$ 226,446,000	$ 295,297,000	$ 226,446,000	$ 278,856,000	$ 262,141,000	$ 208,236,000	$ 192,834,000

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INVESTMENT SECURITIES - Held-to-maturity Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Amortized Cost
Five to ten years	$ 25,576
Amortized Cost	691,423	$ 647,193
Fair Value
Five to ten years	25,801
Fair Value	661,432	647,317
MBS, CMOs and other ABS
Amortized Cost
MBS, CMOs and other ABS	665,847
Fair Value
MBS, CMOs and other ABS	635,631
Residential MBS and CMOs
Amortized Cost
Amortized Cost	222,336	200,775
Fair Value
Fair Value	$ 208,432	$ 200,133

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INVESTMENT SECURITIES - Continuous Unrealized Loss Positions (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 3,162	$ 3,829
Gross Unrecognized Gains	0	189
Gross Unrecognized Losses	(95)	0
Estimated Fair Value	3,067	4,018
Residential MBS
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	3,097	3,761
Gross Unrecognized Gains	0	189
Gross Unrecognized Losses	(95)	0
Estimated Fair Value	3,002	3,950
Less than 12 Months	3,002
Less than 12 Months	(95)
12 Months or More	0
12 Months or More	0
Total	3,002
Total	(95)
Other investments
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	65	68
Gross Unrecognized Gains	0	0
Gross Unrecognized Losses	0	0
Estimated Fair Value	$ 65	$ 68

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INVESTMENT SECURITIES - Schedule of Investment Securities Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Amortized Cost
Five to ten years	$ 65
Amortized Cost	3,162	$ 3,829
Fair Value
Five to ten years	65
Estimated Fair Value	3,067	4,018
MBS
Amortized Cost
MBS	3,097
Fair Value
MBS	3,002
Residential MBS and CMOs
Amortized Cost
Amortized Cost	3,097	3,761
Fair Value
Estimated Fair Value	3,002	$ 3,950
Fair Value
Less than 12 Months	3,002
12 Months or More	0
Total	3,002
Unrecognized Losses
Less than 12 Months	(95)
12 Months or More	0
Total	$ (95)

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LOANS - Loans Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment, gross	$ 6,637,829		$ 6,297,420
Allowance for loan losses	(35,535)	$ (33,035)	(35,535)	$ (41,335)	$ (43,766)	$ (46,214)
Loans held for investment, net	6,602,294		6,261,885
Multifamily residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment, gross	4,414,725		4,210,735
Allowance for loan losses	(26,007)	(24,151)	(26,043)	(30,114)	(30,838)	(33,259)
Multifamily residential | Permanent mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment, gross	4,414,725		4,210,735
Single family residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment, gross	2,011,374		1,881,676
Allowance for loan losses	(7,625)	(6,797)	(7,224)	(8,332)	(9,816)	(9,372)
Single family residential | Permanent mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment, gross	2,011,374		1,881,676
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment, gross	184,708		187,097
Allowance for loan losses	(1,673)	(1,882)	(2,094)	(2,705)	(2,871)	(3,347)
Commercial real estate | Permanent mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment, gross	184,708		187,097
Land and construction loans | Permanent mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment, gross	27,022		17,912
Land and Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment, gross	27,022		17,912
Allowance for loan losses	$ (230)	$ (205)	$ (174)	$ (184)	$ (241)	$ (236)

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LOANS - Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance allocated to portfolio segments	$ 33,035	$ 43,766	$ 35,535	$ 46,214
Provision for (reversal of) loan losses	2,500	(2,500)	0	(5,000)
Charge-offs	0	0	0	0
Recoveries	0	69	0	121
Ending balance allocated to portfolio segments	35,535	41,335	35,535	41,335
Ending allowance balance allocated to:
Loans individually evaluated for impairment	25		25		$ 25
Loans collectively evaluated for impairment	35,510		35,510		35,510
Ending balance	35,535	41,335	35,535	41,335	35,535
Loans:
Ending balance: individually evaluated for impairment	8,864		8,864		6,192
Ending balance: collectively evaluated for impairment	6,628,965		6,628,965		6,291,228
Ending balance	6,637,829		6,637,829		6,297,420
Multifamily residential
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance allocated to portfolio segments	24,151	30,838	26,043	33,259
Provision for (reversal of) loan losses	1,856	(724)	(36)	(3,145)
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Ending balance allocated to portfolio segments	26,007	30,114	26,007	30,114
Ending allowance balance allocated to:
Loans individually evaluated for impairment	0		0		0
Loans collectively evaluated for impairment	26,007		26,007		26,043
Ending balance	26,007	30,114	26,007	30,114	26,043
Loans:
Ending balance: individually evaluated for impairment	852		852		505
Ending balance: collectively evaluated for impairment	4,413,873		4,413,873		4,210,230
Ending balance	4,414,725		4,414,725		4,210,735
Single family residential
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance allocated to portfolio segments	6,797	9,816	7,224	9,372
Provision for (reversal of) loan losses	828	(1,546)	401	(1,104)
Charge-offs	0	0	0	0
Recoveries	0	62	0	64
Ending balance allocated to portfolio segments	7,625	8,332	7,625	8,332
Ending allowance balance allocated to:
Loans individually evaluated for impairment	25		25		25
Loans collectively evaluated for impairment	7,600		7,600		7,199
Ending balance	7,625	8,332	7,625	8,332	7,224
Loans:
Ending balance: individually evaluated for impairment	8,012		8,012		5,687
Ending balance: collectively evaluated for impairment	2,003,362		2,003,362		1,875,989
Ending balance	2,011,374		2,011,374		1,881,676
Commercial real estate
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance allocated to portfolio segments	1,882	2,871	2,094	3,347
Provision for (reversal of) loan losses	(209)	(166)	(421)	(642)
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Ending balance allocated to portfolio segments	1,673	2,705	1,673	2,705
Ending allowance balance allocated to:
Loans individually evaluated for impairment	0		0		0
Loans collectively evaluated for impairment	1,673		1,673		2,094
Ending balance	1,673	2,705	1,673	2,705	2,094
Loans:
Ending balance: individually evaluated for impairment	0		0		0
Ending balance: collectively evaluated for impairment	184,708		184,708		187,097
Ending balance	184,708		184,708		187,097
Land and Construction
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance allocated to portfolio segments	205	241	174	236
Provision for (reversal of) loan losses	25	(64)	56	(109)
Charge-offs	0	0	0	0
Recoveries	0	7	0	57
Ending balance allocated to portfolio segments	230	184	230	184
Ending allowance balance allocated to:
Loans individually evaluated for impairment	0		0		0
Loans collectively evaluated for impairment	230		230		174
Ending balance	230	$ 184	230	$ 184	174
Loans:
Ending balance: individually evaluated for impairment	0		0		0
Ending balance: collectively evaluated for impairment	27,022		27,022		17,912
Ending balance	$ 27,022		$ 27,022		$ 17,912

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LOANS - Portfolio Allocated by Internal Risk Ratings (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	$ 6,637,829	$ 6,297,420
Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	6,561,513	6,185,182
Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	48,803	95,544
Special mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	5,021	4,586
Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	22,492	12,108
Multifamily residential
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	4,414,725	4,210,735
Multifamily residential | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	4,360,690	4,129,767
Multifamily residential | Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	31,663	66,062
Multifamily residential | Special mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	4,058	4,586
Multifamily residential | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	18,314	10,320
Single family residential
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	2,011,374	1,881,676
Single family residential | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	1,993,279	1,856,942
Single family residential | Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	13,917	22,946
Single family residential | Special mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	0	0
Single family residential | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	4,178	1,788
Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	184,708	187,097
Commercial real estate | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	180,522	180,950
Commercial real estate | Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	3,223	6,147
Commercial real estate | Special mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	963	0
Commercial real estate | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	0	0
Land and Construction
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	27,022	17,912
Land and Construction | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	27,022	17,523
Land and Construction | Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	0	389
Land and Construction | Special mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	0	0
Land and Construction | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans held for investment, gross	$ 0	$ 0

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LOANS - Aging Analysis (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable, Past Due [Line Items]
Non-accrual	$ 5,030	$ 2,293
Loans held for investment, gross	6,637,829	6,297,420
30 Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	3,316	271
60 Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	0	0
90+ Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	0	0
Current
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	6,629,483	6,294,856
Multifamily residential
Financing Receivable, Past Due [Line Items]
Non-accrual	852	505
Loans held for investment, gross	4,414,725	4,210,735
Multifamily residential | 30 Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	2,957	0
Multifamily residential | 60 Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	0	0
Multifamily residential | 90+ Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	0	0
Multifamily residential | Current
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	4,410,916	4,210,230
Single family residential
Financing Receivable, Past Due [Line Items]
Non-accrual	4,178	1,788
Loans held for investment, gross	2,011,374	1,881,676
Single family residential | 30 Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	359	271
Single family residential | 60 Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	0	0
Single family residential | 90+ Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	0	0
Single family residential | Current
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	2,006,837	1,879,617
Commercial real estate
Financing Receivable, Past Due [Line Items]
Non-accrual	0	0
Loans held for investment, gross	184,708	187,097
Commercial real estate | 30 Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	0	0
Commercial real estate | 60 Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	0	0
Commercial real estate | 90+ Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	0	0
Commercial real estate | Current
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	184,708	187,097
Land and Construction
Financing Receivable, Past Due [Line Items]
Non-accrual	0	0
Loans held for investment, gross	27,022	17,912
Land and Construction | 30 Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	0	0
Land and Construction | 60 Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	0	0
Land and Construction | 90+ Days
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	0	0
Land and Construction | Current
Financing Receivable, Past Due [Line Items]
Loans held for investment, gross	$ 27,022	$ 17,912

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LOANS - Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Recorded Investment
With no related allowance recorded	$ 8,044		$ 8,044		$ 5,352
With an allowance recorded	820		820		840
Total	8,864		8,864		6,192
Unpaid Principal Balance
With no related allowance recorded	8,311		8,311		5,615
With an allowance recorded	817		817		836
Total	9,128		9,128		6,451
Related Allowance	25		25		25
Average Recorded Investment
With no related allowance recorded	6,986	$ 5,780	6,280	$ 6,398
With an allowance recorded	825	863	830	868
Total	7,811	6,643	7,110	7,266
Interest Income
With no related allowance recorded	54	58	105	125
With an allowance recorded	6	6	12	13
Total	60	64	117	138
Cash Basis Interest
With no related allowance recorded	27	36	54	99
With an allowance recorded	0	0	0	0
Total	27	36	54	99
Multifamily residential
Recorded Investment
With no related allowance recorded	852		852		505
Total	852		852		505
Unpaid Principal Balance
With no related allowance recorded	927		927		582
Total	927		927		582
Related Allowance	0		0		0
Average Recorded Investment
With no related allowance recorded	767	908	654	967
Total	767	908	654	967
Interest Income
With no related allowance recorded	17	8	25	14
Total	17	8	25	14
Cash Basis Interest
With no related allowance recorded	17	8	25	14
Total	17	8	25	14
Single family residential
Recorded Investment
With no related allowance recorded	7,192		7,192		4,847
With an allowance recorded	820		820		840
Total	8,012		8,012		5,687
Unpaid Principal Balance
With no related allowance recorded	7,384		7,384		5,033
With an allowance recorded	817		817		836
Total	8,201		8,201		5,869
Related Allowance	25		25		$ 25
Average Recorded Investment
With no related allowance recorded	6,219	4,872	5,626	5,431
With an allowance recorded	825	863	830	868
Total	7,044	5,735	6,456	6,299
Interest Income
With no related allowance recorded	37	50	80	111
With an allowance recorded	6	6	12	13
Total	43	56	92	124
Cash Basis Interest
With no related allowance recorded	10	28	29	85
With an allowance recorded	0	0	0	0
Total	$ 10	$ 28	$ 29	$ 85

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LOANS - Troubled Debt Restructurings (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($) loan	Jun. 30, 2021 loan	Jun. 30, 2022 USD ($) loan	Jun. 30, 2021 loan	Dec. 31, 2021 USD ($)
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | loan		0	1	0
Modifications, suspension of loan payments, term			6 months
Allowance for credit loss, increase from troubled debt restructuring			$ 0
Impaired, troubled debt restructuring, write-down			$ 0
Subsequent default, number of loans | loan	0	0	0	0
Single family residential
Financing Receivable, Troubled Debt Restructuring [Line Items]
Recorded investment	$ 1,592,000		$ 1,592,000		$ 1,204,000
Related allowance	$ 25,000		$ 25,000		$ 25,000
Number of Contracts | loan			1
Pre-Modification Outstanding Recorded Investment			$ 405,000
Post-Modification Outstanding Recorded Investment			$ 412,000

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NONPERFORMING ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Financing Receivable, Past Due [Line Items]
Total non-accrual loans	$ 5,030		$ 5,030		$ 2,293
Real estate owned	0		0		0
Total nonperforming assets	5,030		5,030		2,293
Interest income recognized on non-accrual loans	27	$ 36	54	$ 99
Contractual interest not accrued during the quarter	17	$ 1	24	$ 16
Multifamily residential
Financing Receivable, Past Due [Line Items]
Total non-accrual loans	852		852		505
Single family residential
Financing Receivable, Past Due [Line Items]
Total non-accrual loans	$ 4,178		$ 4,178		$ 1,788

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MORTGAGE SERVICING RIGHTS - Mortgage Loans Serviced for Others (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Schedule of Loans Serviced for Others [Line Items]
Total mortgage loans serviced for others	$ 142,523	$ 185,729
Federal Home Loan Mortgage Corporation ("Freddie Mac")
Schedule of Loans Serviced for Others [Line Items]
Total mortgage loans serviced for others	93,840	127,431
Other financial institutions
Schedule of Loans Serviced for Others [Line Items]
Total mortgage loans serviced for others	$ 48,683	$ 58,298

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MORTGAGE SERVICING RIGHTS - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
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	$ 3.7	$ 5.0
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	4.70%	7.60%
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	49.70%	48.80%
Weighted Average
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	29.20%	29.20%

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MORTGAGE SERVICING RIGHTS - Mortgage Servicing Rights Activity (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Servicing Asset at Fair Value, Amount [Roll Forward]
Beginning balance	$ 811	$ 1,428	$ 915	$ 1,599
Additions	0	0	0	0
Disposals	0	0	0	0
Changes in fair value due to changes in assumptions	0	0	0	0
Other changes in fair value	(32)	(236)	(136)	(407)
Ending balance	$ 779	$ 1,192	$ 779	$ 1,192

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LEASES (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)
Leases [Abstract]
Renewal term	5 years	5 years
Operating lease right-of-use assets included in prepaid expenses and other assets	$ 15,393	$ 15,393
Operating lease liabilities included in other liabilities and accrued expenses	15,682	15,682
Operating lease costs included in occupancy expense	$ 910	$ 1,839
Weighted average remaining lease term (years) of operating leases	4 years 10 months 24 days	4 years 10 months 24 days
Weighted average discount rate of operating leases	1.88%	1.88%
Cash paid for amounts included in the measurement of operating lease liabilities	$ 1,014	$ 2,051
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
July 1 - December 31, 2022	1,942	1,942
2023	3,719	3,719
2024	3,013	3,013
2025	2,594	2,594
2026	2,398	2,398
Thereafter	2,841	2,841
Total undiscounted lease payments	16,507	16,507
Less: Imputed interest	(825)	(825)
Net lease liabilities	$ 15,682	$ 15,682

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DEPOSITS - Deposits (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Deposits, by Type [Abstract]
Time deposits	$ 2,240,395	$ 2,335,141
Money market savings	2,353,150	2,294,367
Interest-bearing demand	230,587	176,126
Money market checking	671,310	580,325
Noninterest-bearing demand	173,317	152,284
Deposits	$ 5,668,759	$ 5,538,243

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DEPOSITS - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Deposits [Abstract]
Certificates of deposit that meet or exceed FDIC insurance limit	$ 973.4	$ 1,100.0
Brokered deposits	$ 123.1	$ 25.8

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DEPOSITS - Maturities (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Maturities of Time Deposits, Twelve months ending March 31,
July 1 - December 31, 2022	$ 1,355,883
2023	732,749
2024	95,164
2025	7,830
2026	41,073
Thereafter	7,696
Time Deposits	$ 2,240,395

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FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Short-term Debt [Line Items]
FHLB advances, maximum percentage of assets	40.00%		40.00%
Loans held for investment, gross	$ 6,637,829,000		$ 6,637,829,000		$ 6,297,420,000
Borrowing capacity based on pledged loans to the FRB and FHLB	1,100,000,000		1,100,000,000		1,200,000,000
Loans available to be pledged as collateral	2,500,000,000		2,500,000,000		2,500,000,000
Maximum short-term debt outstanding during period	228,400,000	$ 352,900,000	228,400,000	$ 352,900,000
Average short-term debt outstanding during period	$ 95,000,000	$ 242,100,000	$ 58,600,000	$ 165,900,000
Weighted average interest rate	1.05%	0.13%	0.92%	0.14%
FHLB Advances
Short-term Debt [Line Items]
Letters of credit pledged as collateral	$ 62,600,000		$ 62,600,000		62,600,000
FHLB Advances | Asset Pledged as Collateral
Short-term Debt [Line Items]
Loans held for investment, gross	2,800,000,000		2,800,000,000		2,400,000,000
FRB Advances
Short-term Debt [Line Items]
Borrowings outstanding	0		0		0
FRB Advances | Asset Pledged as Collateral
Short-term Debt [Line Items]
Loans held for investment, gross	$ 579,700,000		$ 579,700,000		$ 583,000,000

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FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES - FHLB Advances (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Outstanding Balances	$ 954,947	$ 751,647
FHLB of San Francisco
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Outstanding Balances	954,947	751,647
FHLB of San Francisco | Fixed rate long-term
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Outstanding Balances	$ 801,647	751,647
FHLB of San Francisco | Fixed rate long-term | Minimum
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate	0.38%
FHLB of San Francisco | Fixed rate long-term | Maximum
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate	7.33%
FHLB of San Francisco | Fixed rate long-term | Weighted Average
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate	1.81%
FHLB of San Francisco | Fixed rate short-term
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Outstanding Balances	$ 153,300	$ 0
FHLB of San Francisco | Fixed rate short-term | Minimum
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate	1.66%
FHLB of San Francisco | Fixed rate short-term | Maximum
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate	1.75%
FHLB of San Francisco | Fixed rate short-term | Weighted Average
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate	1.70%

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FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES - Schedule of Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Federal Home Loan Bank, Advances, Fiscal Year Maturity [Abstract]
Outstanding advances from FHLB	$ 954,947	$ 751,647
FHLB of San Francisco
Federal Home Loan Bank, Advances, Fiscal Year Maturity [Abstract]
July 1 - December 31, 2022	153,300
2023	250,000
2024	350,000
2025	101,500
2026	100,000
Thereafter	147
Outstanding advances from FHLB	$ 954,947	$ 751,647

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JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES - Narrative (Details) $ in Millions	6 Months Ended
	Jun. 30, 2022 USD ($) trust
Investment Holdings [Line Items]
Number of wholly-owned trust companies | trust	2
Trusts
Investment Holdings [Line Items]
Investment in common securities | $	$ 1.9
Trust Preferred Securities Subject to Mandatory Redemption | Trusts
Investment Holdings [Line Items]
Interest deferment period (not exceeding)	5 years

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JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES - Schedule of Trusts (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
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	3.21%	1.58%
Trust Preferred Securities Subject to Mandatory Redemption | Luther Burbank Statutory Trust I | Trusts | LIBOR
Debt Instrument [Line Items]
Rate Index (Quarterly Reset)	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	3.45%	1.82%
Trust Preferred Securities Subject to Mandatory Redemption | Luther Burbank Statutory Trust II | Trusts | LIBOR
Debt Instrument [Line Items]
Rate Index (Quarterly Reset)	1.62%

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SENIOR DEBT - Narrative (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021	Sep. 30, 2014
Senior Unsecured Term Notes, September 2014 | Senior Unsecured Term Notes
Debt Instrument [Line Items]
Principal	$ 95,000,000	$ 95,000,000	$ 95,000,000

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SENIOR DEBT - Schedule of Debt (Details) - Senior Unsecured Term Notes, September 2014 - Senior Unsecured Term Notes - USD ($)	Jun. 30, 2022	Dec. 31, 2021	Sep. 30, 2014
Debt Instrument [Line Items]
Principal	$ 95,000,000	$ 95,000,000	$ 95,000,000
Unamortized Debt Issuance Costs	$ 276,000	$ 338,000
Fixed Interest Rate	6.50%

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DERIVATIVES AND HEDGING ACTIVITIES - Narrative (Details) - Designated as Hedging Instrument	6 Months Ended
	Jun. 30, 2021 USD ($) instrument	Jun. 30, 2022 USD ($) instrument	Dec. 31, 2021 USD ($)
Interest Rate Swap
Derivative [Line Items]
Closed portfolio loans used in hedging relationship		$ 1,400,000,000	$ 1,000,000,000
Cumulative amount of last-of-layer fair value hedging basis adjustments		(16,289,000)	(3,110,000)
Fair Value Hedging | Interest Rate Swap
Derivative [Line Items]
Notional amounts		950,000,000	650,000,000
Carrying amount of the last-of-layer hedged assets		$ 933,711,000	$ 646,890,000
Fair Value Hedging | Interest Rate Swap | Three Derivative Instruments Held
Derivative [Line Items]
Number of agreements entered into | instrument		5
Notional amounts		$ 950,000,000
Fair Value Hedging | Interest Rate Swap | One Derivative Instrument Held
Derivative [Line Items]
Notional amounts		$ 300,000,000
Fair Value Hedging | Interest Rate Swap | Two Derivative Instruments Held
Derivative [Line Items]
Number of agreements entered into | instrument		2
Term of contract	2 years
Number of instruments matured during the period | instrument	2
Notional amount matured during the period	$ 1,000,000,000
Fair Value Hedging | Interest Rate Swap One | Two Derivative Instruments Held
Derivative [Line Items]
Notional amount matured during the period	500,000,000
Fair Value Hedging | Interest Rate Swap Two | Two Derivative Instruments Held
Derivative [Line Items]
Notional amount matured during the period	$ 500,000,000

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DERIVATIVES AND HEDGING ACTIVITIES - Schedule of Interest Rate Swap on Consolidated Statement of Income (Details) - Interest Rate Swap - Designated as Hedging Instrument - Fair Value Hedging - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Net increase (decrease) in interest income	$ 463	$ (3,316)	$ 385	$ (6,748)
Interest Income on Loans
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative - interest rate swap, interest income	498	(3,302)	433	(6,719)
Hedged items - loans, interest income	$ (35)	$ (14)	$ (48)	$ (29)

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DERIVATIVES AND HEDGING ACTIVITIES - Schedule of Interest Rate Swap on Consolidated Balance Sheet (Details) - Interest Rate Swap - Designated as Hedging Instrument - Fair Value Hedging - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Derivatives, Fair Value [Line Items]
Notional Amount	$ 950,000,000	$ 650,000,000
Prepaid Expenses and Other Current Assets
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	16,271,000	3,108,000
Other Liabilities and Accrued Expenses
Derivatives, Fair Value [Line Items]
Liability Derivatives, Fair Value	$ 32,000	$ 0

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DERIVATIVES AND HEDGING ACTIVITIES - Schedule of Amounts Recorded on the Balance Sheet Related to Cumulative Adjustments on Fair Value Hedges (Details) - Interest Rate Swap - Designated as Hedging Instrument - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets	$ (16,289)	$ (3,110)
Fair Value Hedging
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Carrying Amount of the Hedged Assets	$ 933,711	$ 646,890

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STOCK BASED COMPENSATION - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for new awards (in shares)	3,360,000		3,360,000
Common stock available for grant (in shares)	1,692,508		1,692,508		1,861,344
RSUs and RSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 616	$ 651	$ 1,300	$ 1,200
Fair value of awards vested			2,600	$ 2,400
Unrecognized compensation expense	$ 3,600		$ 3,600		$ 2,600
Restricted stock awards or units granted (in shares)	411,592		411,592		489,703
Period of recognition for unrecognized compensation expense			1 year 10 months 17 days	1 year 8 months 8 days
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units vested (in shares)	84,727		84,727		91,486
Non-employee directors | Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			1 year
Minimum | Employees | Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Maximum | Employees | Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			4 years

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STOCK BASED COMPENSATION - Awards Activity (Details) - RSUs and RSAs - $ / shares	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Number of Shares
Beginning of the period balance (in shares)	581,189	605,916
Shares granted (in shares)	206,675	289,473
Shares settled (in shares)	(253,706)	(265,655)
Shares forfeited (in shares)	(37,839)	(52,798)
End of the period balance (in shares)	496,319	576,936
Weighted Average Grant Date Fair Value
Beginning of the period balance (in usd per share)	$ 10.56	$ 10.93
Shares granted (in usd per share)	13.81	10.11
Shares settled (in usd per share)	10.45	11.02
Shares forfeited (in usd per share)	11.97	10.26
End of the period balance (in usd per share)	$ 11.86	$ 10.53

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FAIR VALUE MEASUREMENTS - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Debt securities:
Available for sale debt securities, at fair value	$ 661,432	$ 647,317
Held to maturity	3,067	4,018
Equity securities	10,772	11,693
Carrying Amount
Financial assets:
Cash and cash equivalents	86,548	138,413
Debt securities:
Available for sale debt securities, at fair value	661,432	647,317
Held to maturity	3,162	3,829
Equity securities	10,772	11,693
Loans receivable, net	6,602,294	6,261,885
Accrued interest receivable	19,297	17,761
FHLB stock	27,874	23,411
Interest rate swaps	16,271	3,108
Financial liabilities:
Deposits	5,668,759	5,538,243
FHLB advances	954,947	751,647
Junior subordinated deferrable interest debentures	61,857	61,857
Senior debt	94,724	94,662
Accrued interest payable	276	118
Interest rate swap	32
Fair Value
Financial assets:
Cash and cash equivalents	86,548	138,413
Debt securities:
Available for sale debt securities, at fair value	661,432	647,317
Held to maturity	3,067	4,018
Equity securities	10,772	11,693
Loans receivable, net	6,584,788	6,297,548
Accrued interest receivable	19,297	17,761
Interest rate swaps	16,271	3,108
Financial liabilities:
Deposits	5,636,060	5,541,417
FHLB advances	954,909	755,981
Junior subordinated deferrable interest debentures	51,290	61,545
Senior debt	94,194	103,361
Accrued interest payable	276	118
Interest rate swap	32
Fair Value | Level 1
Financial assets:
Cash and cash equivalents	86,548	138,413
Debt securities:
Available for sale debt securities, at fair value	0	0
Held to maturity	0	0
Equity securities	0	0
Loans receivable, net	0	0
Accrued interest receivable	3	1
Interest rate swaps	0	0
Financial liabilities:
Deposits	3,143,363	2,918,102
FHLB advances	0	0
Junior subordinated deferrable interest debentures	0	0
Senior debt	0	0
Accrued interest payable	0	0
Interest rate swap	0
Fair Value | Level 2
Financial assets:
Cash and cash equivalents	0	0
Debt securities:
Available for sale debt securities, at fair value	661,432	647,317
Held to maturity	3,067	4,018
Equity securities	10,772	11,693
Loans receivable, net	0	0
Accrued interest receivable	1,148	927
Interest rate swaps	16,271	3,108
Financial liabilities:
Deposits	2,492,697	2,623,315
FHLB advances	954,909	755,981
Junior subordinated deferrable interest debentures	51,290	61,545
Senior debt	94,194	103,361
Accrued interest payable	276	118
Interest rate swap	32
Fair Value | Level 3
Financial assets:
Cash and cash equivalents	0	0
Debt securities:
Available for sale debt securities, at fair value	0	0
Held to maturity	0	0
Equity securities	0	0
Loans receivable, net	6,584,788	6,297,548
Accrued interest receivable	18,146	16,833
Interest rate swaps	0	0
Financial liabilities:
Deposits	0	0
FHLB advances	0	0
Junior subordinated deferrable interest debentures	0	0
Senior debt	0	0
Accrued interest payable	0	$ 0
Interest rate swap	$ 0

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FAIR VALUE MEASUREMENTS - Assets and Liabilities Recorded at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020
Financial assets:
Available for sale debt securities, at fair value	$ 661,432		$ 647,317
Equity securities	10,772		11,693
Mortgage servicing rights	779	$ 811	915	$ 1,192	$ 1,428	$ 1,599
Financial liabilities:
Impaired loans	820		840
With no related allowance recorded	8,044		5,352
Residential MBS
Financial assets:
Available for sale debt securities, at fair value	208,432		200,133
Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")
Financial assets:
Available for sale debt securities, at fair value	401,175		407,746
Other ABS
Financial assets:
Available for sale debt securities, at fair value	26,024		28,607
Agency bonds
Financial assets:
Available for sale debt securities, at fair value	25,801		10,831
Fair Value
Financial assets:
Available for sale debt securities, at fair value	661,432		647,317
Equity securities	10,772		11,693
Interest rate swaps	16,271		3,108
Financial liabilities:
Interest rate swap	32
Fair Value | Level 1
Financial assets:
Available for sale debt securities, at fair value	0		0
Equity securities	0		0
Interest rate swaps	0		0
Financial liabilities:
Interest rate swap	0
Fair Value | Level 2
Financial assets:
Available for sale debt securities, at fair value	661,432		647,317
Equity securities	10,772		11,693
Interest rate swaps	16,271		3,108
Financial liabilities:
Interest rate swap	32
Fair Value | Level 3
Financial assets:
Available for sale debt securities, at fair value	0		0
Equity securities	0		0
Interest rate swaps	0		0
Financial liabilities:
Interest rate swap	0
Fair Value | Recurring Basis
Financial assets:
Available for sale debt securities, at fair value	661,432		647,317
Equity securities	10,772		11,693
Mortgage servicing rights	779		915
Interest rate swaps	16,271		3,108
Financial liabilities:
Interest rate swap	32
Fair Value | Recurring Basis | Level 1
Financial assets:
Available for sale debt securities, at fair value	0		0
Equity securities	0		0
Mortgage servicing rights	0		0
Interest rate swaps	0		0
Financial liabilities:
Interest rate swap	0
Fair Value | Recurring Basis | Level 2
Financial assets:
Available for sale debt securities, at fair value	661,432		647,317
Equity securities	10,772		11,693
Mortgage servicing rights	0		0
Interest rate swaps	16,271		3,108
Financial liabilities:
Interest rate swap	32
Fair Value | Recurring Basis | Level 3
Financial assets:
Available for sale debt securities, at fair value	0		0
Equity securities	0		0
Mortgage servicing rights	779		915
Interest rate swaps	0		0
Financial liabilities:
Interest rate swap	0
Fair Value | Recurring Basis | Residential MBS
Financial assets:
Available for sale debt securities, at fair value	208,432		200,133
Fair Value | Recurring Basis | Residential MBS | Level 1
Financial assets:
Available for sale debt securities, at fair value	0		0
Fair Value | Recurring Basis | Residential MBS | Level 2
Financial assets:
Available for sale debt securities, at fair value	208,432		200,133
Fair Value | Recurring Basis | Residential MBS | Level 3
Financial assets:
Available for sale debt securities, at fair value	0		0
Fair Value | Recurring Basis | Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")
Financial assets:
Available for sale debt securities, at fair value	401,175		407,746
Fair Value | Recurring Basis | Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs") | Level 1
Financial assets:
Available for sale debt securities, at fair value	0		0
Fair Value | Recurring Basis | Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs") | Level 2
Financial assets:
Available for sale debt securities, at fair value	401,175		407,746
Fair Value | Recurring Basis | Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs") | Level 3
Financial assets:
Available for sale debt securities, at fair value	0		0
Fair Value | Recurring Basis | Other ABS
Financial assets:
Available for sale debt securities, at fair value	26,024		28,607
Fair Value | Recurring Basis | Other ABS | Level 1
Financial assets:
Available for sale debt securities, at fair value	0		0
Fair Value | Recurring Basis | Other ABS | Level 2
Financial assets:
Available for sale debt securities, at fair value	26,024		28,607
Fair Value | Recurring Basis | Other ABS | Level 3
Financial assets:
Available for sale debt securities, at fair value	0		0
Fair Value | Recurring Basis | Agency bonds
Financial assets:
Available for sale debt securities, at fair value	25,801		10,831
Fair Value | Recurring Basis | Agency bonds | Level 1
Financial assets:
Available for sale debt securities, at fair value	0		0
Fair Value | Recurring Basis | Agency bonds | Level 2
Financial assets:
Available for sale debt securities, at fair value	25,801		10,831
Fair Value | Recurring Basis | Agency bonds | Level 3
Financial assets:
Available for sale debt securities, at fair value	0		0
Single family residential
Financial liabilities:
Impaired loans	820		840
With no related allowance recorded	$ 7,192		$ 4,847

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VARIABLE INTEREST ENTITIES (VIE) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Variable Interest Entity [Line Items]
Liabilities	$ 6,858,894	$ 6,510,824
Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Maximum loss exposure as a percentage of original principal amount	10.00%
Maximum loss exposure	$ 62,600
Liabilities	$ 542	$ 727

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LOAN SALE AND SECURITIZATION ACTIVITIES - Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021	Sep. 27, 2017
Fair Value Assumption, Date of Securitization or Asset-backed Financing Arrangement, Transferor's Continuing Involvement, Servicing Assets or Liabilities [Line Items]
Minimum net worth	$ 2,000
Actual net worth	814,900
Tier 1 Leverage Ratio	832,900
Goodwill	3,297	$ 3,297
Accumulated other comprehensive (loss) income, net of taxes	$ (21,295)	$ 88
Multifamily Loan Securitization
Fair Value Assumption, Date of Securitization or Asset-backed Financing Arrangement, Transferor's Continuing Involvement, Servicing Assets or Liabilities [Line Items]
Maximum loss exposure as a percentage of original principal amount	10.00%
Loans receivable | Multifamily residential | Permanent mortgages
Fair Value Assumption, Date of Securitization or Asset-backed Financing Arrangement, Transferor's Continuing Involvement, Servicing Assets or Liabilities [Line Items]
Amount of loans sold			$ 626,000

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LOAN SALE AND SECURITIZATION ACTIVITIES - Cash Flow from Sale of Loans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Transfers and Servicing [Abstract]
Servicing fees	$ 89	$ 147	$ 186	$ 317

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LOAN SALE AND SECURITIZATION ACTIVITIES - Loans Transferred Through Loans or Securitization (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
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		$ 11,414	$ 12,243
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		131,109	173,486
Loans 90+ days past due		0	$ 0
Charge-offs, net	$ 0	$ 0

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COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Operating Leased Assets [Line Items]
Cash balances held at other institutions that exceed FDIC insured limits	$ 25,500,000	$ 25,500,000
Federal Funds | Line of Credit
Operating Leased Assets [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	50,000,000	50,000,000
Commitments to Extend Credit
Operating Leased Assets [Line Items]
Real estate loan funding commitments	162,700,000	132,800,000
Unfunded Loan Commitment
Operating Leased Assets [Line Items]
Reserve recorded on real estate loan funding commitments	$ 118,000	$ 153,000