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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 ClassTrading SymbolName of Each Exchange on Which Registered
Common stock, no par valueLBCThe Nasdaq Stock Market LLC

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

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

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

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

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

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



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

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

Given the ongoing and dynamic nature of the coronavirus disease 2019 ("COVID-19") pandemic, the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects remain uncertain. Deterioration in general business and economic conditions resulting from the continuing pandemic, including the tight labor market, supply chain disruptions, inflationary pressures, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. Some of the other risks and uncertainties that may cause the Company’s actual results, performance or achievements to differ materially from those expressed include, but are not limited to, the following: the impact of changes in interest rates; political instability; the effects of war or other conflicts, including, but not limited to, the current conflict between Russia and Ukraine; changes in the monetary policies of the U.S. Government; a decline in economic conditions; deterioration in the value of West Coast real estate, both residential and commercial; an increase in the level of non-performing assets and charge-offs; further increased competition among financial institutions; the Company’s ability to continue to attract deposits and quality loan customers; further government regulation, including regulations regarding capital requirements, and the implementation and costs associated with the same; internal and external fraud and cyber-security threats including the loss of bank or customer funds, loss of system functionality or the theft or loss of data; management’s ability to successfully manage the Company’s operations; and the other risks set forth in the Company’s reports filed with the U.S. Securities and Exchange Commission. For further discussion of these and other factors, see “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q and the Company’s 2021 Annual Report on Form 10-K.

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


2

PART I.

Item 1. Financial Statements
LUTHER BURBANK CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollar amounts in thousands)
March 31,
2022 (unaudited)
December 31,
2021
ASSETS
Cash and cash equivalents$147,963 $138,413 
Available for sale debt securities, at fair value624,859 647,317 
Held to maturity debt securities, at amortized cost (fair value of $3,802 and $4,018 at March 31, 2022 and December 31, 2021, respectively)
3,798 3,829 
Equity securities, at fair value11,116 11,693 
Loans receivable, net of allowance for loan losses of $33,035 and $35,535 at March 31, 2022 and December 31, 2021, respectively
6,333,283 6,261,885 
Accrued interest receivable18,014 17,761 
Federal Home Loan Bank ("FHLB") stock, at cost22,563 23,411 
Premises and equipment, net15,590 16,090 
Goodwill3,297 3,297 
Prepaid expenses and other assets80,343 56,261 
Total assets$7,260,826 $7,179,957 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $5,601,247 $5,538,243 
FHLB advances751,647 751,647 
Junior subordinated deferrable interest debentures61,857 61,857 
Senior debt
$95,000 face amount, 6.5% interest rate, due September 30, 2024 (less debt issuance costs of $307 and $338 at March 31, 2022 and December 31, 2021, respectively)
94,693 94,662 
Accrued interest payable153 118 
Other liabilities and accrued expenses83,229 64,297 
Total liabilities6,592,826 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 March 31, 2022 and December 31, 2021, respectively
  
Common stock, no par value; 100,000,000 shares authorized; 51,403,914 and 51,682,398 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively
401,102 406,904 
Retained earnings278,856 262,141 
Accumulated other comprehensive income (loss), net of taxes(11,958)88 
Total stockholders' equity668,000 669,133 
Total liabilities and stockholders' equity$7,260,826 $7,179,957 
See accompanying notes to unaudited consolidated financial statements

3

LUTHER BURBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollar amounts in thousands, except per share data)
Three Months Ended March 31,
20222021
Interest and fee income:
Loans$53,633 $54,058 
Investment securities2,301 1,982 
Cash, cash equivalents and restricted cash66 51 
Total interest and fee income56,000 56,091 
Interest expense:
Deposits6,020 11,606 
FHLB advances3,097 3,933 
Junior subordinated deferrable interest debentures275 258 
Senior debt1,574 1,575 
Total interest expense10,966 17,372 
Net interest income before provision for loan losses45,034 38,719 
Reversal of provision for loan losses(2,500)(2,500)
Net interest income after provision for loan losses47,534 41,219 
Noninterest income:
FHLB dividends354 367 
Other income(296)(58)
Total noninterest income58 309 
Noninterest expense:
Compensation and related benefits10,219 10,380 
Deposit insurance premium481 472 
Professional and regulatory fees539 484 
Occupancy1,194 1,215 
Depreciation and amortization603 655 
Data processing988 973 
Marketing458 292 
Other expenses1,030 933 
Total noninterest expense15,512 15,404 
Income before provision for income taxes32,080 26,124 
Provision for income taxes9,140 7,713 
Net income$22,940 $18,411 
Basic earnings per common share$0.45 $0.35 
Diluted earnings per common share$0.45 $0.35 
Dividends per common share$0.12 $0.06 

See accompanying notes to unaudited consolidated financial statements

4

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

Three Months Ended March 31,
20222021
Net income$22,940 $18,411 
Other comprehensive loss:
Unrealized loss on available for sale debt securities:
Unrealized holding loss arising during the period(16,965)(3,815)
Tax effect4,919 1,109 
Total other comprehensive loss, net of tax(12,046)(2,706)
Comprehensive income$10,894 $15,705 

See accompanying notes to unaudited consolidated financial statements

5

LUTHER BURBANK CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
(Dollar amounts in thousands, except per share data)
Accumulated Other Comprehensive Income (Loss) (Net of Taxes)Total Stockholders' Equity
Common StockRetained EarningsAvailable for Sale Securities
SharesAmount
Balance, December 31, 202052,220,266 $414,120 $192,834 $6,737 $613,691 
Net income— — 18,411 — 18,411 
Other comprehensive loss— — — (2,706)(2,706)
Restricted stock award grants283,078 — — — — 
Settled restricted stock units68,873 — — — — 
Shares withheld to pay taxes on stock based compensation(85,825)(901)— — (901)
Restricted stock forfeitures(52,798)(67)13 — (54)
Stock based compensation expense— 651 — — 651 
Shares repurchased(201,682)(2,101)— — (2,101)
Cash dividends ($0.06 per share)
— — (3,022)— (3,022)
Balance, March 31, 202152,231,912 $411,702 $208,236 $4,031 $623,969 
Balance, December 31, 202151,682,398 $406,904 $262,141 $88 $669,133 
Net income— — 22,940 — 22,940 
Other comprehensive loss— — — (12,046)(12,046)
Restricted stock award grants206,675 — — — — 
Settled restricted stock units6,759 — — — — 
Shares withheld to pay taxes on stock based compensation(62,422)(875)— — (875)
Restricted stock forfeitures(4,100)(4)2— (2)
Stock based compensation expense— 714 — — 714 
Shares repurchased(425,396)(5,637)— — (5,637)
Cash dividends ($0.12 per share)
— — (6,227)— (6,227)
Balance, March 31, 202251,403,914 $401,102 $278,856 $(11,958)$668,000 


See accompanying notes to unaudited consolidated financial statements

6

LUTHER BURBANK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollar amounts in thousands)
Three Months Ended March 31,
20222021
Cash flows from operating activities:
Net income$22,940 $18,411 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization603 655 
Reversal of provision for loan losses(2,500)(2,500)
Amortization of deferred loan costs, net4,792 4,626 
Amortization of premiums on investment securities, net337 657 
Stock based compensation expense, net of forfeitures710 584 
Change in fair value of mortgage servicing rights104 171 
Change in fair value of equity securities577 211 
Other items, net44 55 
Effect of changes in:
Accrued interest receivable(253)(386)
Accrued interest payable35 (654)
Prepaid expenses and other assets4,293 1,773 
Other liabilities and accrued expenses3,140 1,800 
Net cash provided by operating activities34,822 25,403 
Cash flows from investing activities:
Proceeds from maturities, paydowns and calls of available for sale debt securities38,296 39,735 
Proceeds from maturities and paydowns of held to maturity debt securities29 1,741 
Purchases of available for sale debt securities(33,140)(90,113)
Net (increase) decrease in loans receivable(81,469)57,275 
Purchase of loans, including discounts/premiums (286,917)
Redemption of FHLB stock, net848  
Purchase of premises and equipment(103)(112)
Net cash used in investing activities(75,539)(278,391)
Cash flows from financing activities:
Net increase in deposits63,004 127,579 
Proceeds from long-term FHLB advances100,000  
Repayment of long-term FHLB advances(100,000)(100,000)
Net change in short-term FHLB advances 134,200 
Shares withheld for taxes on vested restricted stock(875)(901)
Shares repurchased(5,637)(2,101)
Cash paid for dividends(6,225)(3,009)
Net cash provided by financing activities50,267 155,768 
Increase (decrease) in cash, cash equivalents and restricted cash9,550 (97,220)
Cash, cash equivalents and restricted cash, beginning of period138,413 178,861 
Cash, cash equivalents and restricted cash, end of period$147,963 $81,641 
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest$10,931 $18,026 
Income taxes$6 $8 
Supplemental non-cash disclosures:
Lease liabilities arising from obtaining right-of-use assets$16,255 $ 

See accompanying notes to unaudited consolidated financial statements

7


LUTHER BURBANK CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.NATURE OF OPERATIONS

Organization

Luther Burbank Corporation (the ‘‘Company’’), a California corporation headquartered in Santa Rosa, is the bank holding company for its wholly-owned subsidiary, Luther Burbank Savings (the "Bank"), and its wholly-owned subsidiary, Burbank Investor Services. The Company also owns Burbank Financial Inc., a real estate investment company 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 months ended March 31, 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.
8

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 March 31,
20222021
Net income$22,940 $18,411 
Weighted average basic common shares outstanding51,337,488 51,982,731 
Add: Dilutive effects of assumed vesting of restricted stock76,931 115,507 
Weighted average diluted common shares outstanding51,414,419 52,098,238 
Income per common share:
Basic EPS$0.45 $0.35 
Diluted EPS$0.45 $0.35 
Anti-dilutive shares not included in calculation of diluted earnings per share20 3,695 
Adoption of New Financial Accounting Standards
FASB ASU 2016-02
On January 1, 2022, the Company adopted ASU No. 2016-02 “Leases (Topic 842)” and subsequent amendments thereto, which requires the Company to recognize most leases on the balance sheet. The Company adopted the standard under a modified retrospective approach as of the date of adoption and elected to apply several of the available practical expedients, including carryover of historical lease determination and lease classification conclusions and accounting for lease and non-lease components in contracts in which the Company is a lessee as a single lease component.
Adoption of the leasing standard resulted in the recognition of operating right-of-use assets of $15.8 million, and operating lease liabilities of $16.3 million as of January 1, 2022. These amounts were determined based on the present value of remaining minimum lease payments, discounted using the Company’s incremental borrowing rate as of the date of adoption. There was no material impact to the timing of expense or income recognition in the Company’s unaudited consolidated statements of income. Prior periods were not restated and continue to be presented under legacy GAAP. Disclosures about the Company’s leasing activities are presented in Note 6.
FASB ASU 2022-01
In March 2022, the Financial Accounting Standards Board (“FASB”) issued guidance under the of the last-of-layer hedging method in Accounting Standards Codification ("ASC") 815 to expand the current single-layer method to allow multiple layers of a single closed portfolio to be hedged. To reflect the expansion, the last-of-layer method will be renamed the portfolio layer method. The amendments also expand the scope of and provide additional guidance specific to the portfolio layer method for hedge accounting. ASU 2022-01 will become effective for public business entities for fiscal years beginning after December 15, 2022, with early adoption permitted. The adoption of this standard is not expected to have a material effect on the Company’s operating results or financial condition.
9

FASB ASU 2022-02
In March 2022, the FASB issued guidance to improve the usefulness of disclosures regarding certain loan refinancings, restructurings and write-offs under ASC 326. The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the current expected credit loss (“CECL”) methodology and enhance the disclosure requirements for certain loan refinancings and restructurings made to borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current period gross write-offs for financing receivables and net investments in leases by year of origination. ASU 2022-02 will become effective for fiscal years beginning after December 15, 2022 for public business entities that have adopted the CECL accounting standard. The Company expects to adopt this guidance on January 1, 2023, concurrent with the adoption of the CECL standard. The adoption of this standard is not expected to have a material effect on the Company’s operating results or financial condition.
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 CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
At March 31, 2022:
Government and Government Sponsored Entities:
Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")$414,904 $1,895 $(10,196)$406,603 
Residential MBS and CMOs188,493 477 (8,624)180,346 
Agency bonds10,275 225  10,500 
Other asset backed securities ("ABS")28,028  (618)27,410 
Total available for sale debt securities$641,700 $2,597 $(19,438)$624,859 
At December 31, 2021:
Government and Government Sponsored Entities:
Commercial MBS and CMOs$407,111 $3,281 $(2,646)$407,746 
Residential MBS and CMOs200,775 1,225 (1,867)200,133 
Agency bonds10,587 244  10,831 
Other ABS28,720 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 $(12.0) million and $88 thousand, net of $4.9 million and $(36) thousand in tax assets (liabilities), at March 31, 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 months ended March 31, 2022 or 2021.

10

The following tables summarize the gross unrealized losses and fair value of available for sale debt securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
March 31, 2022
Less than 12 Months12 Months or MoreTotal
(Dollars in thousands)Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Government and Government Sponsored Entities:
Commercial MBS and CMOs$152,363 $(6,982)$46,724 $(3,214)$199,087 $(10,196)
Residential MBS and CMOs115,227 (6,427)19,497 (2,197)134,724 (8,624)
Agency bonds      
Other ABS27,411 (618)  27,411 (618)
Total available for sale debt securities$295,001 $(14,027)$66,221 $(5,411)$361,222 $(19,438)
At March 31, 2022, the Company held 86 residential MBS and CMOs of which 27 were in a loss position and five had been in a loss position for twelve months or more. The Company held 57 commercial MBS and CMOs of which 29 were in a loss position and five 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 Months12 Months or MoreTotal
(Dollars in thousands)Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Government and Government Sponsored Entities:
Commercial MBS and CMOs$157,031 $(2,632)$10,608 $(14)$167,639 $(2,646)
Residential MBS and CMOs118,803 (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 March 31, 2022 or December 31, 2021.
As of March 31, 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.
11

Held to Maturity
The following table summarizes the amortized cost and estimated fair value of held to maturity investment securities as of the dates indicated:
(Dollars in thousands)Amortized CostGross Unrecognized GainsGross Unrecognized LossesEstimated Fair Value
As of March 31, 2022:
Government Sponsored Entities:
Residential MBS$3,731 $18 $(14)$3,735 
Other investments67   67 
Total held to maturity investment securities$3,798 $18 $(14)$3,802 
As of December 31, 2021:
Government Sponsored Entities:
Residential MBS$3,761 $189 $ $3,950 
Other investments68   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 Months12 Months or MoreTotal
(Dollars in thousands)Fair ValueUnrecognized LossesFair ValueUnrecognized LossesFair ValueUnrecognized Losses
As of March 31, 2022:
Government Sponsored Entities:
Residential MBS$1,992 $(14)$ $ $1,992 $(14)
At March 31, 2022, the Company had seven held to maturity residential MBS of which five 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 March 31, 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 March 31, 2022.
The following table summarizes the scheduled maturities of available for sale and held to maturity investment securities as of March 31, 2022:
March 31, 2022
(Dollars in thousands)Amortized CostFair Value
Available for sale debt securities
Five to ten years$10,275 $10,500 
MBS, CMOs and other ABS631,425 614,359 
Total available for sale debt securities$641,700 $624,859 
Held to maturity investments securities
Five to ten years$67 $67 
MBS3,731 3,735 
Total held to maturity debt securities$3,798 $3,802 
12

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 March 31, 2022 or December 31, 2021.

Equity Securities

Equity securities consist of investments in a qualified community reinvestment fund. At March 31, 2022 and December 31, 2021, the fair value of equity securities totaled $11.1 million and $11.7 million, respectively. Changes in fair value are recognized in other noninterest income and totaled $(577) thousand and $(211) thousand during the three months ended March 31, 2022 and 2021, respectively. There were no sales of equity securities during the three months ended March 31, 2022 or 2021.
3.     LOANS
Loans consist of the following:
(Dollars in thousands)March 31,
2022
December 31,
2021
Permanent mortgages on:
Multifamily residential$4,232,227 $4,210,735 
Single family residential1,916,220 1,881,676 
Commercial real estate194,354 187,097 
Construction and land loans23,517 17,912 
Total6,366,318 6,297,420 
Allowance for loan losses(33,035)(35,535)
Loans held for investment, net$6,333,283 $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 ResidentialSingle Family ResidentialCommercial Real EstateLand and ConstructionTotal
Three months ended March 31, 2022
Allowance for loan losses:
Beginning balance allocated to portfolio segments$26,043 $7,224 $2,094 $174 $35,535 
(Reversal of) provision for loan losses(1,892)(427)(212)31 (2,500)
Charge-offs     
Recoveries     
Ending balance allocated to portfolio segments$24,151 $6,797 $1,882 $205 $33,035 
Three months ended March 31, 2021
Allowance for loan losses:
Beginning balance allocated to portfolio segments$33,259 $9,372 $3,347 $236 $46,214 
(Reversal of) provision for loan losses(2,421)442 (476)(45)(2,500)
Charge-offs     
Recoveries 2  50 52 
Ending balance allocated to portfolio segments$30,838 $9,816 $2,871 $241 $43,766 
13

The following table summarizes the allocation of the allowance for loan losses by impairment methodology:
(Dollars in thousands)Multifamily ResidentialSingle Family ResidentialCommercial Real EstateLand and ConstructionTotal
As of March 31, 2022:
Ending allowance balance allocated to:
Loans individually evaluated for impairment$ $25 $ $ $25 
Loans collectively evaluated for impairment24,151 6,772 1,882 205 33,010 
Ending balance$24,151 $6,797 $1,882 $205 $33,035 
Loans:
Ending balance: individually evaluated for impairment$500 $5,643 $ $ $6,143 
Ending balance: collectively evaluated for impairment4,231,727 1,910,577 194,354 23,517 6,360,175 
Ending balance$4,232,227 $1,916,220 $194,354 $23,517 $6,366,318 
As of December 31, 2021:
Ending allowance balance allocated to:
Loans individually evaluated for impairment$ $25 $ $ $25 
Loans collectively evaluated for impairment26,043 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