LUTHER BURBANK CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)

The following discussion and analysis is based on and should be read in
conjunction with Part II. Item 6. Selected Financial Data and our consolidated
financial statements and the accompanying notes thereto contained elsewhere in
this Annual Report on Form 10-K. Because we conduct all of our material business
operations through our bank subsidiary, Luther Burbank Savings, the discussion
and analysis relates to activities primarily conducted by the Bank.

The following discussion and analysis is intended to facilitate the
understanding and assessment of significant changes and trends in our business
that accounted for the changes in our results of operations for the year ended
December 31, 2021, as compared to our results of operations for the year ended
December 31, 2020, and our financial condition at December 31, 2021 as compared
to our financial condition at December 31, 2020.

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In addition to historical information, this discussion and analysis contains
forward-looking statements that are subject to certain risks and uncertainties
and are based on certain assumptions that we believe are reasonable but may
prove to be inaccurate. Certain risks, uncertainties and other factors,
including those set forth in the "Cautionary Note Regarding Forward-Looking
Statements" and "Risk Factors" sections of this Annual Report, may cause actual
results to differ materially from those projected results discussed in the
forward-looking statements appearing in this discussion and analysis. Please
read these sections carefully. We assume no obligation to update any of these
forward-looking statements.

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 $7.2 billion in assets at December 31,
2021. 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.

Significant Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with 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
Financial Statements for the year ended December 31, 2021. 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 JOBS Act, as an emerging growth company, we can elect to opt out
of the extended transition period for adopting any new or revised accounting
standards. We have 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. In accordance
with the requirements of the JOBS Act, our eligibility as an emerging growth
company 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

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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
and the home price index. Changes in these economic variables will typically
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.

Fair value measurement

We use estimates of fair value in applying various accounting standards for our
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 consolidated statements of income.

Impairment of investment securities

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

Non-GAAP Financial Measures

Some of the financial measures discussed in Item 6. Selected Financial Data and
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation are ''non-GAAP financial measures.'' In accordance with SEC rules,
we classify a financial measure as being a non-GAAP financial measure if that
financial measure excludes or includes amounts, or is subject to adjustments
that have the effect of excluding or including amounts, that are included or
excluded, as the case may be, in the most directly comparable measure calculated
and presented in accordance with GAAP as in effect from time to time in the
United States in our consolidated statements financial condition, income or cash
flows.

Pre-tax, pre-provision net earnings is defined as net income before taxes and
provision for (reversal of) loan losses. We believe the most directly comparable
GAAP financial measure is income before taxes. Disclosure of this measure
enables investors to compare our operations to those of other banking companies
before consideration of taxes and provision expense, as well as recaptures from
the allowance for loan losses. For the year ended December 31, 2017, we
calculated our pro forma net income, return on average assets, return on average
equity and per share amounts by adding back our franchise S-Corporation tax to
net income, and using a combined C-Corporation effective tax rate for federal
and California income taxes of 42.0%. This calculation reflects only the change
in our status as an S-Corporation and does not give effect to any other
transaction. Beginning January 1, 2018, our pro forma income tax expense is our
actual C-Corporation tax provision. Tangible book value is defined as total
assets less goodwill and total liabilities. Efficiency ratio is defined as
noninterest expenses divided by operating revenue, which is equal to net
interest income plus noninterest income. For the year ended December 31,

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2020, we calculated a pro forma net income and efficiency ratio to reverse the
impact of a material non-recurring cost incurred in connection with the
prepayment of long-term FHLB borrowings.

We believe that these non-GAAP financial measures provide useful information to
management and investors that is supplementary to our consolidated statements of
financial condition, income and cash flows computed in accordance with GAAP.
However, we acknowledge that our non-GAAP financial measures have a number of
limitations. As such, 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:

(Dollars in thousands, except per                                     As of or For the Years Ended December 31,
share data)                                    2021                 2020                 2019                 2018                 2017
Pre-tax, Pre-provision Net Earnings
Income before provision for income
taxes                                     $   124,000          $    56,659  

$69,464 $62,931 $65,231
Plus: (Reversal of) allowance for loan losses

                                   (10,800)              10,550                1,250                3,600               (3,372)

Net profit before tax and before provision $113,200 $67,209

$70,714 $66,531 $61,859
Efficiency ratio Non-interest expense (numerator)

           $    59,145          $    73,934          $    62,368          $    62,687          $    56,544
Net interest income                           170,459              138,623              128,407              125,087              110,895
Noninterest income                              1,886                2,520                4,675                4,131                7,508
Operating revenue (denominator)           $   172,345          $   141,143  

$133,082 $129,218 $118,403
Efficiency report

                                34.32  %             52.38  %             46.86  %             48.51  %             47.76  %
Pro Forma Efficiency Ratio (1)
Noninterest expense                                            $    73,934
Less: Non-recurring noninterest
expense item, before income taxes                                  (10,443)
Pro forma noninterest expense
(numerator)                                                    $    63,491
Operating revenue (denominator)                                $   141,143
Pro forma efficiency ratio                                           44.98  %
Pro Forma Net Income (1)
Net income                                                     $    39,912
Add: Non-recurring noninterest
expense item, net income taxes                                       7,352
Pro forma net income                                           $    47,264
Actual/Pro Forma Net Income (2)
Income before provision for income
taxes                                     $   124,000          $    56,659          $    69,464          $    62,931          $    65,231
Actual/pro forma provision for
income taxes                                   36,247               16,747               20,603               17,871               27,397
Actual/pro forma net income
(numerator)                               $    87,753          $    39,912          $    48,861          $    45,060          $    37,834
Actual/Pro Forma Diluted Earnings Per Share (2)
Weighted average common shares
outstanding - diluted (denominator)
(3)                                        51,769,098           53,146,298           56,219,892           56,825,402           42,957,936
Actual/pro forma diluted earnings
per share                                 $      1.70          $      0.75  

$0.87 $0.79 $0.88
Actual/pro forma return on average assets (2)

 Actual/pro forma net income
(numerator)                               $    87,753          $    39,912  

$48,861 $45,060 $37,834
Average assets (denominator)

              $ 7,183,172          $ 7,092,407  

$7,066,547 $6,405,931 $5,485,832
Actual/pro forma return on average assets

                                           1.22  %              0.56  %              0.69  %              0.70  %              0.69  %

Actual/pro forma return on average equity (2)

 Actual/pro forma net income
(numerator)                               $    87,753          $    39,912  

$48,861 $45,060 $37,834
Average equity (denominator)

                             $   643,492          $   610,770          $   599,574          $   566,275          $   425,698
Actual/pro forma return on average
stockholders' equity                            13.64  %              6.53  %              8.15  %              7.96  %              8.89  %


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Contents

(Dollars in thousands, except                                      As of or For the Years Ended December 31,
per share data)                             2021                 2020                 2019                 2018                 2017
Tangible Book Value Per Share
Total assets                           $ 7,179,957          $ 6,906,104          $ 7,045,828          $ 6,937,212          $ 5,704,380
Less: Goodwill                              (3,297)              (3,297)              (3,297)              (3,297)              (3,297)
Tangible assets                          7,176,660            6,902,807            7,042,531            6,933,915            5,701,083
Less: Total liabilities                 (6,510,824)          (6,292,413)   

(6,431,364) (6,356,067) (5,154,635) Tangible equity (numerator)

                            $   665,836          $   610,394     

$611,167 $577,848 $546,448
Shares outstanding at end of period (denominator)

                           51,682,398           52,220,266           55,999,754           56,379,066           56,422,662

Tangible book value per share $12.88 $11.69

$10.91 $10.25 $9.68

(1) For the year ended December 31, 2020, net income and efficiency ratio are adjusted to reverse the impact of a non-recurring cost
incurred in connection with the prepayment of $150 million of long-term FHLB advances in December 2020.
(2) For the year ended December 31, 2017, we calculated our pro forma net income, return on average assets and return on average
stockholders' equity by adding back our franchise S-Corporation tax to net income, and using a combined C-Corporation effective tax rate
for federal and California income taxes of 42.0%. This calculation reflects only the change in our status as an S-Corporation and does
not give effect to any other transaction. Beginning January 1, 2018, our pro forma provision for tax expense is our actual C-Corporation
provision.
(3) Weighted average common shares outstanding - diluted has been adjusted retroactively for the year ended December 31, 2017 to reflect
a 200-for-1 stock split effective April 27, 2017.


Key Factors Affecting Our Business

Interest rate

Net interest income is the largest contributor to our net income and is the
difference between the interest and fees earned on interest-earning assets and
the interest expense incurred in connection with interest-bearing liabilities.
Net interest income is primarily a function of the average balances and yields
of these interest-earning assets and interest-bearing liabilities. These factors
are influenced by internal considerations such as product mix and risk appetite,
as well as external influences such as economic conditions, competition for
loans and deposits and market interest rates.

The cost of our deposits and short-term wholesale borrowings is primarily based
on short-term interest rates, which are largely driven by the Federal Reserve's
actions and market competition. The yields generated by our loans and securities
are typically affected by short-term and long-term interest rates, which are
driven by market competition and market rates often impacted by the Federal
Reserve's actions. The level of net interest income is influenced by movements
in such interest rates and the pace at which such movements occur.

Based on our liability sensitivity as discussed in Item 7A. ''Quantitative and
Qualitative Disclosures About Market Risk'', increases in interest rates and/or
a flatter yield curve could have an adverse impact on our net interest income.
Conversely, decreases in interest rates, particularly at the short end, and/or a
steepened yield curve would be expected to benefit our net interest income.

Operational efficiency

We have invested heavily in our infrastructure, including our management, our lending teams, our technology systems and our risk management practices. As we began to leverage these investments, our efficiency generally improved.

Credit quality

We have well established loan policies and underwriting practices that have
generally resulted in very low levels of charge-offs and nonperforming assets.
We strive to originate quality loans that will maintain the credit quality of
our loan portfolio. However, credit trends in the markets in which we operate
are largely impacted by economic conditions beyond our control and can adversely
impact our financial condition and results of operations.

Competetion

The industry and businesses in which we operate are highly competitive. We may
see increased competition in different areas including interest rates,
underwriting standards and product offerings and loan structure. While we seek
to maintain an appropriate return on our investments, we may experience
continued pressure on our net

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interest margin as we operate in this competitive environment.

Economic conditions

Our business and financial performance are affected by economic conditions
generally in the United States and more directly in the markets of California,
Washington and Oregon where we primarily operate. The significant economic
factors that are most relevant to our business and our financial performance
include, but are not limited to, real estate values, interest rates and
unemployment rates.

Factors affecting the comparability of financial results

S corporation status

We terminated our status as a "Subchapter S" corporation as of December 1, 2017,
in connection with our IPO. Prior to this date, we elected to be taxed for U.S.
federal income tax purposes as an S-Corporation. As a result, our earnings were
not subject to, and we did not pay, U.S. federal income tax, and we were not
required to make any provision or recognize any liability for U.S. federal
income tax in our financial statements. While we were not subject to and did not
pay U.S. federal income tax, we were subject to, and paid, California
S-Corporation income tax at a rate of 3.50%.

Upon the termination of our status as an S-Corporation on December 1, 2017, we
commenced paying U.S. federal income tax and a higher California income tax on
our taxable earnings and our financial statements reflect a provision for both
U.S. federal income tax and California income tax. As a result of this change,
the net income and earnings per share data presented in our historical financial
statements and the other financial information set forth in this Annual Report,
which unless otherwise specified, do not include any provision for U.S. federal
income tax, will not be comparable with our net income and earnings per share in
periods after we commenced being taxed as a C-Corporation. As a C-Corporation,
our net income is calculated by including a provision for U.S. federal income
tax, currently at 21.00%, and a California income tax rate, currently at 10.84%.

As an S-Corporation, we made quarterly cash distributions to our shareholders in
amounts estimated by us to be sufficient for them to pay estimated individual
U.S. federal and California income tax liabilities resulting from our taxable
income that was ''passed through'' to them. However, these distributions were
not consistent, as sometimes the distributions were less than or in excess of
the shareholders' estimated U.S. federal and California income tax liabilities
resulting from their ownership of our stock. In addition, these estimates were
based on individual income tax rates, which may differ from the rates imposed on
the income of C-Corporations. Subsequent to the termination of our S-Corporation
status on December 1, 2017, other than our obligations under the tax sharing
agreement with prior S-Corporation shareholders, no further income will be
''passed through'' to shareholders for any estimated tax liabilities.

Public Company Costs

As a result of our initial public offering completed in December 2017, we are
incurring additional costs associated with operating as a public company. These
costs include additional personnel, legal, consulting, regulatory, insurance,
accounting, investor relations and other expenses that we did not incur as a
private company.

The Sarbanes-Oxley Act, as well as rules adopted by the SEC and national
securities exchanges, requires public companies to implement specified corporate
governance practices that were inapplicable to us as a private company. These
additional rules and regulations increased our legal, regulatory and financial
compliance costs and will make some activities more time-consuming and costly.

COVID-19[female[feminine

Beginning in early 2020 and continuing through December 2021, the COVID-19
pandemic caused a disruption to almost every aspect of the economy. As a result,
in March 2020, the Company implemented a lending modification initiative to
support our customers financially impacted by the COVID-19 pandemic and unable
to make their scheduled loan payments. The program provided borrowers the
opportunity to modify their existing real estate loans by temporarily deferring
payments for a specified period of time. Modified loans under this program were
generally downgraded from a Pass risk rating to a Watch risk rating at the time
of their respective modification. Subsequent to the modification period, loan
grades were adjusted, as necessary, in connection with the Company's proactive
reassessment of loans impacted by the pandemic. Loan risk ratings are an
integral part of the quantitative

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calculation of our allowance for loan losses.

Further, in early 2020, we established a qualitative loan loss reserve in
connection with the uncertainty related to the pandemic. This supplemental
reserve has been slowly reduced as the impact of the pandemic on our loan
portfolio has become less uncertain. Qualitative adjustments to our allowance
specific to COVID-19 were $2.5 million and $8.4 million as of December 31, 2021
and 2020, respectively. Management intends to closely monitor the level of this
reserve and make any necessary adjustments as conditions related to the pandemic
change.

All of the loans modified for pandemic related payment deferral in 2020 and 2021
had returned to scheduled monthly payments or paid off in full by June 2021.
Additionally, total criticized loans have declined to $16.7 million at December
31, 2021, as compared to $57.0 million at December 31, 2020. The decline in
criticized loans from the prior year end was generally attributable to the
continued performance of our loans that were initially impacted by the pandemic.
During the years ended December 2021 and 2020, the Company incurred no loan
losses for pandemic impacted loans. The Company's exposure to nonresidential
commercial real estate remains limited, totaling $187.1 million, or 3.0% of our
loan portfolio, at December 31, 2021.

Results of operations – Years ended December 31, 2021 and 2020

Overview

For the year ended December 31, 2021 our net income was $87.8 million as
compared to $39.9 million for the year ended December 31, 2020. The increase of
$47.8 million, or 119.9%, was primarily attributable to an increase of $31.8
million in net interest income, a $21.4 million decrease in the provision for
loan losses, and a $14.8 million decrease in noninterest expense, partially
offset by an increase of $19.5 million in the provision for income taxes as
compared to the prior year. Pre-tax, pre-provision net earnings increased by
$46.0 million, or 68.4%, for the year ended December 31, 2021 as compared to the
prior year. Excluding the impact of a $10.4 million non-recurring cost incurred
in connection with the prepayment of $150.0 million of long-term fixed rate FHLB
borrowings in December 2020, pre-tax, pre-provision net income would have
increased $35.5 million, or 45.8%, for the year ended December 31, 2021 as
compared to the prior year.

Net interest income

Net interest income totaled $170.5 million for the year ended December 31, 2021,
an increase of $31.8 million, compared to the prior year. The increase in net
interest income was primarily impacted by lower interest expense driven by a 72
basis point decline in the cost of interest-bearing deposits and a $640.5
million decrease in the average balance of time deposits. Interest expense was
further reduced by a decrease in the average balance and cost of FHLB advances
of $96.9 million and 58 basis points, respectively. These improvements were
partially offset by a decline in interest income resulting from a 26 basis point
decrease in the yield on our loans and a 23 basis point decline in the yield on
our investment securities, partially offset by $136.0 million increase in the
average balance of multifamily loans.

Net interest margin for the year ended December 31, 2021 was 2.40%, compared to
1.97% for the prior year. The increase in our margin was primarily related to
the decline in the cost of our interest-bearing deposits, partially offset by
the decline in the yields of our loan and investment portfolios, as discussed
above. Over the year, the yield on our interest-earning assets decreased by 23
basis points, while the cost of our interest-bearing liabilities decreased by 70
basis points. Our net interest spread for the year ended December 31, 2021 was
2.30%, increasing by 47 basis points as compared to last year.

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 years ended
December 31, 2021, 2020 and 2019. The average balances are daily averages.

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                                                                                                                        For the Years Ended December 31,
                                                                 2021                                                                 2020                                                                 2019
                                                                Interest                                                             Interest                                                             Interest
(Dollars in thousands)                Average Balance            Inc/Exp             Yield/Rate            Average Balance            Inc/Exp             Yield/Rate            Average Balance            Inc/Exp             Yield/Rate
Interest-Earning Assets
Multifamily residential             $      4,199,639          $  155,509                   3.70  %       $      4,063,607          $  155,104                   3.82  %       $      3,870,897          $  162,328                   4.19  %
Single family residential                  1,897,575              53,695                   2.83  %              1,907,940              65,030                   3.41  %              2,139,517              76,766                   3.59  %
Commercial real estate                       196,456               8,893                   4.53  %                206,639               9,530                   4.61  %                196,903               9,353                   4.75  %
Construction and land                         18,920               1,148                   6.07  %                 20,199               1,332                   6.59  %                 15,907               1,083                   6.81  %
Total loans (1)                            6,312,590             219,245                   3.47  %              6,198,385             230,996                   3.73  %              6,223,224             249,530                   4.01  %
Investment securities                        653,479               8,451                   1.29  %                647,174               9,856                   1.52  %                661,574              15,461                   2.34  %
Cash, cash equivalents and
restricted cash                              150,166                 223                   0.15  %                185,246                 538                   0.29  %                105,042               2,151                   2.05  %
Total interest-earning assets              7,116,235             227,919                   3.20  %              7,030,805             241,390                   3.43  %              6,989,840             267,142                   3.82  %
Noninterest-earning assets (2)                66,937                                                               61,602                                                               76,707
Total assets                        $      7,183,172                                                     $      7,092,407                                                     $      7,066,547
Interest-Bearing Liabilities
Transaction accounts                $        158,956                 358                   0.22  %       $        178,655                 876                   0.48  %       $        210,743               2,686                   1.26  %
Money market demand accounts               2,427,599              11,889                   0.48  %              1,652,109              14,862                   0.88  %              1,402,608              18,181                   1.28  %
Time deposits                              2,750,461              23,365                   0.84  %              3,390,992              57,593                   1.67  %              3,538,223              84,225                   2.35  %
   Total deposits                          5,337,016              35,612                   0.66  %              5,221,756              73,331                   1.38  %              5,151,574             105,092                   2.01  %
FHLB advances                                868,591              14,535                   1.67  %                965,490              21,761                   2.25  %              1,056,557              24,896                   2.36  %
Junior subordinated debentures                61,857               1,015                   1.64  %                 61,857               1,373                   2.22  %                 61,857               2,447                   3.96  %
Senior debt                                   94,596               6,298                   6.66  %                 94,473               6,302                   6.67  %                 94,350               6,300                   6.68  %
Total interest-bearing liabilities         6,362,060              57,460                   0.90  %              6,343,576             102,767                   1.60  %              6,364,338             138,735                   2.16  %
Noninterest-bearing deposit
accounts                                     112,436                                                               69,208                                                               41,821
Noninterest-bearing liabilities               65,184                                                               68,853                                                               60,814
Total liabilities                          6,539,680                                                            6,481,637                                                            6,466,973
Total stockholders' equity                   643,492                                                              610,770                                                              599,574
Total liabilities and stockholders'
equity                              $      7,183,172                                                     $      7,092,407                                                     $      7,066,547

Net interest spread (3)                                                                    2.30  %                                                              1.83  %                                                              1.66  %
Net interest income/margin (4)                                $  170,459                   2.40  %                                 $  138,623                   1.97  %                                 $  128,407                   1.84  %


(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 $19.6 million, $16.2 million and $14.6
million for the years ended December 31, 2021, 2020 and 2019, 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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                                                        For the Years Ended December 31, 2021 vs 2020
                                                                       Variance Due To
(Dollars in thousands)                               Volume                 Yield/Rate               Total
Interest-Earning Assets
Multifamily residential                        $          5,240          $      (4,835)         $        405
Single family residential                                  (350)               (10,985)              (11,335)
Commercial real estate                                     (471)                  (166)                 (637)
Construction and land                                       (82)                  (102)                 (184)
Total Loans                                               4,337                (16,088)              (11,751)
Investment securities                                        95                 (1,500)               (1,405)
Cash, cash equivalents and restricted cash                  (89)                  (226)                 (315)
Total interest-earning assets                             4,343                (17,814)              (13,471)
Interest-Bearing Liabilities
Transaction accounts                                        (88)                  (430)                 (518)
Money market demand accounts                              5,204                 (8,177)               (2,973)
Time deposits                                            (9,426)               (24,802)              (34,228)
Total deposits                                           (4,310)               (33,409)              (37,719)
FHLB advances                                            (2,025)                (5,201)               (7,226)
Junior subordinated debentures                                -                   (358)                 (358)
Senior debt                                                   7                    (11)                   (4)
Total interest-bearing liabilities                       (6,328)               (38,979)              (45,307)

Net Interest Income                            $         10,671          $      21,165          $     31,836


                                                       For the Years Ended December 31, 2020 vs 2019
                                                                      Variance Due To
(Dollars in thousands)                              Volume                Yield/Rate               Total
Interest-Earning Assets
Multifamily residential                        $        7,723          $     (14,947)         $     (7,224)
Single family residential                              (8,021)                (3,715)              (11,736)
Commercial real estate                                    456                   (279)                  177
Construction and land                                     285                    (36)                  249
Total Loans                                               443                (18,977)              (18,534)
Investment securities                                    (328)                (5,277)               (5,605)
Cash, cash equivalents and restricted cash                981                 (2,594)               (1,613)
Total interest-earning assets                           1,096                (26,848)              (25,752)
Interest-Bearing Liabilities
Transaction accounts                                      928                 (1,825)                 (897)
Money market demand accounts                            1,425                 (5,657)               (4,232)
Time deposits                                          (3,348)               (23,284)              (26,632)
Total deposits                                           (995)               (30,766)              (31,761)
FHLB advances                                          (2,035)                (1,100)               (3,135)
Junior subordinated debentures                              -                 (1,074)               (1,074)
Senior debt                                                 9                     (7)                    2
Total interest-bearing liabilities                     (3,021)               (32,947)              (35,968)

Net Interest Income                            $        4,117          $       6,099          $     10,216



Total interest income decreased by $13.5 million, or 5.6%, for the year ended
December 31, 2021 as compared to the prior year. Interest income on loans
decreased $11.8 million to $219.2 million for the year ended December 31, 2021
from $231.0 million for the prior year. The decline was primarily due to a 26
basis point decrease in our loan yield, as compared to the prior year due to the
prepayment of higher yielding loans, which are being replaced by loans at lower
current interest rates, as well as a $3.4 million increase in accelerated loan
cost amortization on

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prepaid loans, partially offset by a $136.0 million increase in the average
balance of multifamily residential loans and a $3.2 million decline in the cost
of our interest rate swaps as compared to the prior year. Additionally, interest
income on investments decreased by $1.4 million primarily due to a reduced yield
on investment securities of 23 basis points. The decline in our investment yield
was generally caused by variable rate securities repricing to lower current
interest rates, as well as the accelerated prepayment of securities backed by
mortgages.

During the year ended December 31, 2021, total loans increased $247.6 million
compared to a decrease of $181.2 million during the year ended December 31,
2020. The volume of new loans originated totaled $2.4 billion and $1.4 billion
for the years ended December 31, 2021 and 2020, respectively. Volume for the
current year includes the purchase of a $287.8 million pool of fixed rate single
family loans in February 2021. The weighted average rate on new loans for the
year ended December 31, 2021 was 3.30% compared to 3.71% for the prior year. The
decline in the average coupon for current year originations compared to the
prior year was due to the general lower level of market interest rates and
competitive market pressures compounded by excess liquidity in financial
markets. Loan payoffs and paydowns totaled $2.1 billion and $1.6 billion for the
years ended December 31, 2021 and 2020, respectively. Elevated loan prepayment
speeds were primarily related to customers refinancing their hybrid-ARM loans to
take advantage of lower long-term interest rates. The weighted average rate on
loan payoffs during the year ended December 31, 2021 was 3.93% as compared to
4.15% for the prior year.

Total interest expense decreased $45.3 million to $57.5 million for the year
ended December 31, 2021 from $102.8 million for the prior year. Interest expense
on deposits decreased $37.7 million to $35.6 million for the year ended December
31, 2021 from $73.3 million for the prior year. This decrease was primarily due
to the cost of interest-bearing deposits decreasing 72 basis points
predominantly due to our deposit portfolio repricing to lower current market
interest rates, as well an increase in the proportion of non-maturity deposits
within the portfolio which totaled 57.8% at year ended December 31, 2021
compared to 41.9% at December 31, 2020. Interest expense on advances from the
FHLB decreased by $7.2 million during the year ended December 31, 2021 as
compared to the prior year. This decrease was due to a decline in the average
balance and cost of FHLB advances of $96.9 million and 58 basis points,
respectively. We generally use both deposits and FHLB advances to fund net loan
growth. We also use FHLB advances, with or without embedded interest rate caps,
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.''

Allowance for loan losses

During the year ended December 31, 2021, we reversed provisions for loan losses
totaling $10.8 million, compared to recording provisions for loan losses of
$10.6 million for the year ended December 31, 2020. The recaptured loan loss
provisions during the current year primarily related to the reversal of reserves
initially established during the year ended December 31, 2020 for the uncertain
economic impact associated with the COVID-19 pandemic. Additionally, we
recognized further reserve releases for general improvements in asset quality
within our loan portfolio. The Company continues to maintain approximately $2.5
million in qualitative reserves attributed to the pandemic.

Nonperforming loans totaled $2.3 million and $6.3 million, or 0.04% and 0.10% of
total loans, at December 31, 2021 and 2020, respectively. During the year ended
December 31, 2021, total criticized loans decreased by $40.3 million, or 70.7%,
compared to the prior year, and finished the current year at $16.7 million. The
decline in criticized loan balances was attributable to both the improvement in
our loans that were initially impacted by the pandemic, as well as the upgrade
and payoff of criticized and classified loans that were downgraded for reasons
unrelated to the pandemic. As of June 2021, all loans modified for pandemic
related payment deferral during 2020 and 2021 had returned to scheduled payments
or paid off in full. Our allowance for loan losses as a percentage of total
loans was 0.56% at December 31, 2021 as compared to 0.76% at December 31, 2020.

Non-interest income

Noninterest income decreased by $634 thousand to $1.9 million for the year ended
December 31, 2021 from $2.5 million for the year ended December 31, 2020. The
following table presents the major components of our noninterest income:

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For the years ended the 31st of December,

                                                                                               $ Increase               % Increase
(Dollars in thousands)                                  2021                 2020              (Decrease)               (Decrease)
Noninterest Income

FHLB dividends                                     $      1,558          $   1,650          $         (92)                      (5.6) %
Fee income                                                  420                232                    188                       81.0  %
Other                                                       (92)               638                   (730)                    (114.4) %
Total noninterest income                           $      1,886          $   2,520          $        (634)                     (25.2) %


The decrease in noninterest income for the year ended December 31, 2021 compared
to the year ended December 31, 2020 was primarily due to a $344 thousand decline
in market value on equity securities recorded during the current year compared
to an increase in market value of $255 thousand recorded during the prior year.
This decrease was partially offset by a $188 thousand increase in fee income due
to additional deposit account fees earned primarily related our specialty
deposit accounts.

Non-interest expenses

Noninterest expense decreased $14.8 million, or 20.0%, to $59.1 million for the
year ended December 31, 2021 from $73.9 million for 2020. The following table
presents the components of our noninterest expense:

                                                                      For the Years Ended December 31,
                                                                                          $ Increase              % Increase
(Dollars in thousands)                            2021                   2020             (Decrease)              (Decrease)
Noninterest Expense
Compensation and related benefits          $    38,624               $  43,100          $    (4,476)                     (10.4) %
FHLB advance prepayment penalty                      -                  10,443              (10,443)                    (100.0) %
Deposit insurance premium                        1,920                   1,905                   15                        0.8  %
Professional and regulatory fees                 1,976                   1,844                  132                        7.2  %
Occupancy                                        4,933                   4,585                  348                        7.6  %
Depreciation and amortization                    2,561                   2,685                 (124)                      (4.6) %
Data processing                                  3,785                   3,911                 (126)                      (3.2) %
Marketing                                        1,240                   1,683                 (443)                     (26.3) %
Other expenses                                   4,106                   3,778                  328                        8.7  %
Total noninterest expense                  $    59,145               $  73,934          $   (14,789)                     (20.0) %


The decrease in noninterest expense during the year ended December 31, 2021 as
compared to the prior year was primarily attributable to a non-recurring $10.4
million prepayment fee incurred in connection with the prepayment of $150.0
million of FHLB borrowings in December 2020. The prepayments were a strategic
decision to utilize low yielding excess liquidity to reduce high cost borrowings
to benefit our net interest margin in future quarters. The decrease in
noninterest expense was further impacted by a $4.5 million decline in
compensation costs primarily due to an increase in capitalized loan origination
costs related to higher loan volumes compared to the prior year.

Our efficiency ratio was 34.3% for the year ended December 31, 2021 compared to
52.4% for the prior year. Excluding the impact of the nonrecurring cost of the
prepayment fee on FHLB borrowings discussed above, our efficiency ratio would
have been 45.0% for the year ended December 31, 2020.

income tax expense

For the years ended December 31, 2021 and 2020, we recorded income tax expense
of $36.2 million and $16.7 million, respectively, with effective tax rates of
29.2% and 29.6%, respectively.

Financial situation – As of December 31, 2021 and 2020

Total assets at December 31, 2021 were $7.2 billionan augmentation of $273.9 millioni.e. 4.0%, from December 31, 2020. The increase is mainly due to a
$247.6 million increase in loans and a $49.6 million increase in

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investment securities, partially offset by a $40.4 million decrease in cash as
compared to December 31, 2020. Total liabilities were $6.5 billion at
December 31, 2021, an increase of $218.4 million, or 3.5%, from December 31,
2020. The increase in total liabilities was primarily attributable to growth in
our deposits of $273.9 million compared to the prior year end, partially offset
by a decrease in FHLB advances of $55.1 million.

Composition of loan portfolio

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 December 31, 2021 and 2020, our total loans amounted
to $6.3 billion and $6.0 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 December 31,
                                                  2021                                       2020                                       2019                                       2018                                       2017
(Dollars in thousands)                Amount             % of total              Amount             % of total              Amount             % of total              Amount             % of total              Amount             % of total
Real estate loans
Multifamily residential           $ 4,183,194                  66.9  %       $ 4,075,893                  67.9  %       $ 3,962,929                  64.1  %       $ 3,650,967                  60.1  %       $ 2,887,438                  57.7  %
Single family residential           1,859,524                  29.8  %         1,700,119                  28.3  %         1,993,484                  32.3  %         2,231,802                  36.7  %         1,957,546                  39.2  %
Commercial real estate                186,531                   3.0  %           202,189                   3.4  %           202,452                   3.3  %           183,559                   3.0  %           112,492                   2.3  %
Construction and land                  18,094                   0.3  %            22,241                   0.4  %            20,665                   0.3  %            12,756                   0.2  %            41,215                   0.8  %
Total loans held for
investment before deferred
items                               6,247,343                 100.0  %         6,000,442                 100.0  %         6,179,530                 100.0  %         6,079,084                 100.0  %         4,998,691                 100.0  %
Deferred loan costs, net               50,077                                     49,374                                     51,447                                     51,546                                     42,856
Total loans                       $ 6,297,420                                $ 6,049,816                                $ 6,230,977                                $ 6,130,630                                $ 5,041,547


The relative composition of the loan portfolio has not changed significantly
over the past few years. Our primary focus remains multifamily real estate
lending, which constitutes 67% and 68% of our portfolio at December 31, 2021 and
2020, respectively. Single family residential lending is our secondary lending
emphasis and represents 30% and 28% of our portfolio at December 31, 2021 and
2020, respectively. The increase in the percentage of single family residential
loans during the current year was augmented by the purchase of a $287.8 million
pool of fixed-rate loans in February 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 551% and 575% as of December 31, 2021
and 2020, respectively. Our single family loans as a percentage of risk-based
capital were 246% and 242% as of the same dates. Additionally, our loans are
geographically concentrated with borrowers and collateral properties on the West
Coast. At December 31, 2021, 63%, 26% and 9% of our real estate loans were
collateralized by properties in southern California counties, northern
California counties and Washington, respectively, compared to 62%, 26% and 10%,
respectively, at December 31, 2020.

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.

We have a small portfolio of construction loans with commitments (funded and
unfunded) totaling $38.1 million and $34.7 million at December 31, 2021 and
2020, respectively. As of December 31, 2021, the average loan commitment for our
single family construction product, which includes small tract housing and
condominium projects, and multifamily residential construction loans was $5.1
million and $6.4 million, respectively. Our construction lending typically
focuses on non-owner occupied single family residential projects with completed
per-unit values of $4.0 million or less and multifamily projects with loan
commitments of $15.0 million or less.

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

                                                                   For the Years Ended December 31,
(Dollars in thousands)                 2021                   2020                 2019                 2018                 2017
Loan Inflows:
Multifamily residential          $    1,282,311          $   904,588          $   891,116          $ 1,119,617          $ 1,302,896
Single family residential               768,614              494,753              591,177              828,907              726,485
Commercial real estate                    2,000               12,106               38,088               84,808               63,893
Construction and land                    27,612                9,583               33,618               14,555               29,010
Mortgage banking originations                 -                    -                    -                    -               18,041
Purchases                               287,751               20,380               10,052                    -                    -
Total loans originated and
purchased                             2,368,288            1,441,410            1,564,051            2,047,887            2,140,325

Loan Outflows:
Loan principal reductions and
payoffs                              (2,095,438)          (1,640,597)          (1,376,413)            (956,578)            (909,387)
Portfolio loan sales                     (1,706)                (825)             (68,325)             (19,603)            (652,705)
Mortgage banking loan sales                   -                    -                    -                    -              (25,187)
Other (1)                               (23,540)              18,851              (18,966)              17,377               10,109
Total loan outflows                  (2,120,684)          (1,622,571)          (1,463,704)            (958,804)          (1,577,170)
Net change in total loan
portfolio                        $      247,604          $  (181,161)       

$100,347 $1,089,083 $563,155

(1) Other changes in loan balances primarily represent the net change in disbursements on unfunded commitments, deferred loan fees, fair value adjustments and, to the extent possible, may include foreclosures, write-offs , negative amortizations and capitalized interest as a result of COVID-19 Amendments.


Our loan portfolio increased $247.6 million during the year ended December 31,
2021. The growth of our loan portfolio was primarily due to an increase of
$659.5 million in new loan origination volume and a purchase of a $287.8 million
pool of fixed-rate single family loans, partially offset by a $454.8 million
increase in loan principal reductions and payoffs. Loan curtailments increased
during the current year as compared to 2020 primarily as a result of refinancing
activity. In early 2020, long-term Treasury rates, which are generally
correlated to lending rates, declined significantly allowing borrowers the
opportunity to lock in less expensive borrowing costs. Loan prepayment speeds
were 27.4% and 22.4% during the years ended December 31, 2021 and 2020,
respectively. During 2017, we closed a securitization transaction resulting in
the sale of $626.1 million of multifamily loans. The primary purpose of this
transaction was to enable us to redeploy capital and funding to support
higher-yielding assets while also reducing our reliance on wholesale funding,
improving liquidity measures and reducing our concentration of multifamily
loans. In that same year, mortgage banking loan sales primarily consisted of
30-year fixed rate single family residential loans that were sold through our
retail mortgage banking division, which was closed during the first quarter of
2017.

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 December 31, 2021, our multifamily real estate portfolio had 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, as compared to an average loan balance of $1.6 million, an average
unit count of 14.6 units, a weighted average loan to value of 56.6% and a
weighted average debt service coverage ratio of 1.5 at December 31, 2020.

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.

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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 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. At December 31, 2020, our single family
residential real estate portfolio had an average loan balance of $941 thousand,
a weighted average loan to value of 63.9% and a weighted average credit score at
origination/refreshed of 751. Compared to the prior year end, the declines in
the average loan balance and weighted average loan to value, as well as the
improvement in the weighted average credit score were due to the single family
loan pool purchase in February 2021, discussed above.

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
December 31, 2021, our commercial real estate portfolio had 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 1.70, as compared to an average
loan balance of $2.1 million, a weighted average loan to value of 55.1% and a
weighted average debt service coverage ratio of 1.52 at December 31, 2020.
Lending in nonresidential commercial real estate has been intentionally limited
since the start of the pandemic.

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

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

                                                                       Due after 5
                                     Due in 1 year  Due after 1 year years through 15  Due after 15
(Dollars in thousands)                  or less     through 5 years       years            years          Total
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
As of December 31, 2020:
Loans
Real estate mortgage loans:
Multifamily residential             $          9    $       6,336    $      31,569    $  4,037,979    $ 4,075,893
Single family residential                     35            1,143            4,989       1,693,952      1,700,119
Commercial real estate                         -            4,451          195,945           1,793        202,189
Construction and land                     19,030            3,211                -               -         22,241
Total loans                         $     19,074    $      15,141    $     232,503    $  5,733,724    $ 6,000,442

Fixed interest rates                $          -    $          11    $         583    $     24,263    $    24,857
Floating or hybrid adjustable rates       19,074           15,130          231,920       5,709,461      5,975,585
Total loans                         $     19,074    $      15,141    $     232,503    $  5,733,724    $ 6,000,442



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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. As discussed above, the increase in fixed rate loans at
December 31, 2021 compared to the prior year was due to our purchase of a pool
of fixed rate single family loans in February 2021. 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 December 31, 2021 and 2020, $4.8 billion
and $4.3 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 3.75% and 4.03% at December 31, 2021 and 2020,
respectively. Hybrid adjustable rate loans still within their initial fixed term
totaled $5.1 billion and $5.3 billion at December 31, 2021 and 2020,
respectively. These loans had a weighted average term to first repricing date of
3.6 years and 3.3 years at December 31, 2021 and 2020, respectively.

Asset quality

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

In conjunction with the passage of the Coronavirus Aid, Relief, and Economic
Security Act ("CARES Act"), as well as the revised interagency guidance issued
in April 2020, "Interagency Statement on Loan Modifications and Reporting for
Financial Institutions Working With Customers Affected by the Coronavirus
(Revised)", banks were provided the option, for loans meeting specific criteria,
to temporarily suspend certain requirements under GAAP related to TDRs for a
limited time to account for the effects of COVID-19. As a result, the Company
did not recognize eligible COVID-19 loan modifications as TDRs. Additionally,
loans qualifying for these modifications were not required to be reported as
delinquent, nonaccrual, impaired or criticized solely as a result of a COVID-19
loan modification. Since June 2021, all loans modified for pandemic related
payment deferral had returned to scheduled payments or paid off in full.

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

                                                                          As of December 31,
(Dollars in thousands)                        2021              2020             2019             2018              2017
Non-accrual loans
   Multifamily residential portfolio       $    505          $   522          $   541          $    564          $ 2,250
   Single family residential portfolio        1,788            5,791            5,792             1,448            4,016
   Commercial real estate                         -                -                -                 -              656
   Construction and land                          -                -                -                 -                -
Total non-accrual loans                       2,293            6,313            6,333             2,012            6,922

Real estate owned                                 -                -                -                 -                -
Total nonperforming assets                 $  2,293          $ 6,313          $ 6,333          $  2,012          $ 6,922
Performing troubled debt restructurings    $  1,204          $ 1,260          $ 1,305          $  4,434          $ 4,857
Allowance for loan losses to period end
nonperforming loans                         1549.72  %        732.04  %        568.47  %        1705.47  %        437.91  %
Nonperforming loans to period end loans        0.04  %          0.10  %          0.10  %           0.03  %          0.14  %
Nonperforming assets to total assets           0.03  %          0.09  %          0.09  %           0.03  %          0.12  %
Nonperforming loans plus performing TDRs
to total loans                                 0.06  %          0.13  %          0.12  %           0.11  %          0.23  %


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

For the years ended December 31, 2021 and 2020, $125 thousand and $122 thousand,
respectively, in interest income was recognized on non-accrual loans subsequent
to their classification as non-accrual. For the years ended December 31, 2021
and 2020, the Company recorded $94 thousand and $57 thousand, respectively, of
interest income related to performing TDR loans. Gross interest income that
would have been recorded on non-accrual loans had they been current in
accordance with their original terms was $15 thousand and $169 thousand for the
years ended December 31, 2021 and 2020, respectively.

Potential Problem Loans. We utilize a risk grading system for our loans to aid
us in evaluating the overall credit quality of our real estate loan portfolio
and assessing the adequacy of our allowance for loan losses. All loans are
categorized into a risk category at the time of origination, re-evaluated at
least annually for proper classification in conjunction with our review of
property and borrower financial information and re-evaluated for proper risk
grading as new information such as payment patterns, collateral condition and
other relevant information comes to our attention. We use the following industry
accepted definitions for risk ratings.

•Pass: Assets 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 loan is still valid and all payments have
essentially been made as planned.

• One to Watch: The assets are expected to experience an event within the next 90-120 days that will cause the risk rating to change, with the change being either favorable or unfavourable. These assets require increased 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 our credit position
at some future date. Special mention assets are not adversely classified and do
not expose us 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 we will sustain some loss, either directly or indirectly (i.e.,
the cost of monitoring), if the deficiencies are not corrected. 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.

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•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 its
continuance as an asset, 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 achieved in the future.

The banking industry defines loans graded Special Mention or higher risk as
''criticized'' and loans graded Substandard or greater risk as ''classified''
loans. The following table shows our level of criticized and classified loans as
of the periods indicated:

                                            Special
(Dollars in thousands)                      Mention      Substandard     Doubtful        Loss      Total Criticized    Total Classified
As of December 31, 2021:
Multifamily residential                  $    4,586    $     10,320    $        -    $       -    $         14,906    $        10,320
Single family residential                         -           1,788             -            -               1,788              1,788
Commercial real estate                            -               -             -            -                   -                  -
Construction and land                             -               -             -            -                   -                  -
Total                                    $    4,586    $     12,108    $   

-$-$16,694 $12,108
Loans classified as end-of-period loans

                                                     0.19  %
As of December 31, 2020:
Multifamily residential                  $   19,547    $     20,204    $        -    $       -    $         39,751    $        20,204
Single family residential                     7,132           6,547             -            -              13,679              6,547
Commercial real estate                        3,599               -             -            -               3,599                  -
Construction and land                             -               -             -            -                   -                  -
Total                                    $   30,278    $     26,751    $   

-$-$57,029 $26,751
Loans classified as end-of-period loans

                                                     0.44  %
As of December 31, 2019:
Multifamily residential                  $   19,708    $      1,700    $        -    $       -    $         21,408    $         1,700
Single family residential                    13,635           8,808         1,600            -              24,043             10,408
Commercial real estate                            -               -             -            -                   -                  -
Construction and land                             -               -             -            -                   -                  -
Total                                    $   33,343    $     10,508    $   

$1,600 – $45,451 $12,108
Loans classified as end-of-period loans

                                                     0.20  %
As of December 31, 2018:
Multifamily residential                  $    2,631    $      1,937    $        -    $       -    $          4,568    $         1,937
Single family residential                       380           5,532             -            -               5,912              5,532
Commercial real estate                        1,489               -             -            -               1,489                  -
Construction and land                         2,537               -             -            -               2,537                  -
Total                                    $    7,037    $      7,469    $   

– $ – $ $14,506 $7,469 Loans classified as period-end loans

                                                     0.12  %
As of December 31, 2017:
Multifamily residential                  $    6,621    $      7,799    $        -    $       -    $         14,420    $         7,799
Single family residential                     9,106           4,276             -            -              13,382              4,276
Commercial real estate                            -           1,638             -            -               1,638              1,638
Construction and land                             -               -             -            -                   -                  -
Total                                    $   15,727    $     13,713    $   

-$-$29,440 $13,713
Loans classified as end-of-period loans

                                                                                             0.27  %



Potential problem loans represent loans that are currently performing but for which there is known information

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us about possible credit problems that may result in disclosure of such loans as
nonperforming at some time in the future. We define ''potential problem loans''
as loans with a risk rating of ''Substandard'', ''Doubtful'' or ''Loss'' that
are not included in the amounts of non-accrual or restructured loans. As we
cannot predict all circumstances that may cause our borrowers to default, there
can be no assurance that these loans will not be placed on non-accrual status or
become restructured. At December 31, 2021 and 2020, we have identified potential
problem loans totaling $9.8 million and $20.4 million, respectively, that were
all classified as ''Substandard''.

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.

                                                                                                                           As of December 31,
                                            2021                                       2020                                       2019                                       2018                                       2017
                            Allowance for         % of Loans in       

Provision for % of Loans in Provision for % of Loans in Provision for % of Loans in Provision for % of Loans in (in thousands of dollars) Loan Losses Each Category Loan Losses Each Category Loan Losses Each Category Loan Losses Each Category Loan losses

          Each Category
Multifamily residential     $    26,043                  66.9  %       $    33,259                  67.9  %       $    23,372                  64.1  %       $    21,326                  60.1  %       $    18,588                  57.7  %
Single family residential         7,224                  29.8  %             9,372                  28.3  %            10,076                  32.3  %            10,125                  36.7  %             9,044                  39.2  %
Commercial real estate            2,094                   3.0  %             3,347                   3.4  %             2,341                   3.3  %             2,441                   3.0  %             1,734                   2.3  %
Construction and land               174                   0.3  %               236                   0.4  %               212                   0.3  %               422                   0.2  %               946                   0.8  %
Total                       $    35,535                 100.0  %       $    46,214                 100.0  %       $    36,001                 100.0  %       $    34,314                 100.0  %       $    30,312                 100.0  %


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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:

                                                                                Years Ended December 31,
(Dollars in thousands)                          2021                 2020                 2019                 2018                 2017
Loans held-for-investment                  $ 6,297,420          $ 6,049,816 

$6,230,977 $6,130,630 $5,041,547
Allowance for loan losses at the beginning of the period

                                     $    46,214          $    36,001 

$34,314 $30,312 $33,298
Dump :

   Single family residential                         -                 (722)                   -                    -                   (5)

Recoveries:
   Multifamily residential                           -                    -                    -                    -                    -
   Single family residential                        64                   85                   12                   12                   12
   Commercial real estate                            -                    -                    -                   90                    -
   Construction and land                            57                  300                  425                  300                  379
     Total recoveries                              121                  385                  437                  402                  391
Net recoveries (charge-offs)                       121                 (337)                 437                  402                  386
(Reversal of) provision for loan losses        (10,800)              10,550                1,250                3,600               (3,372)

Allowance for loan losses at end of period $35,535 $46,214

$36,001 $34,314 $30,312
Provision for loan losses on loans at the end of the period held for investment

                         0.56  %              0.76  %              0.58  %              0.56  %              0.60  %

(Recoveries) net annualized write-offs on average loans:

   Multifamily residential                        0.00  %              0.00  %              0.00  %              0.00  %              0.00  %
   Single family residential                     (0.00) %              0.03  %             (0.00) %             (0.00) %             (0.00) %
   Commercial real estate                            -  %                 -  %                 -  %             (0.06) %              0.00  %
   Construction and land                         (0.30) %             (1.49) %             (2.67) %             (1.11) %             (0.83) %
Annualized total net (recoveries)
charge-offs total to average loans               (0.00) %              0.01  %             (0.01) %             (0.01) %             (0.01) %


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 as of
the dates indicated:

                                                                                     As of December 31,
                                                                      2021                                          2020
(Dollars in thousands)                                 Book Value             % of Total            Book Value             % of Total
Available for sale debt securities:
Government and Government Sponsored Entities:
Residential mortgage backed securities
("MBS") and collateralized mortgage
obligations ("CMOs")                                $    200,133                    30.19  %       $  216,724                    35.34  %
Commercial MBS and CMOs                                  407,746                    61.52  %          361,988                    59.03  %
Agency bonds                                              10,831                     1.63  %           15,022                     2.45  %
Other asset backed securities ("ABS")                     28,607                     4.32  %                -                        -  %
Total available for sale debt securities                 647,317                    97.66  %          593,734                    96.82  %
Held to maturity:
Government Sponsored Entities:
Residential MBS                                            3,761                     0.57  %            7,391                     1.21  %
Other investments                                             68                     0.01  %               76                     0.01  %
Total held to maturity debt securities                     3,829                     0.58  %            7,467                     1.22  %
Equity securities                                         11,693                     1.76  %           12,037                     1.96  %
Total investment securities                         $    662,839                   100.00  %       $  613,238                   100.00  %


The following table presents the book value of our investment portfolio by their
stated maturities, as well as the weighted average yields for each maturity
range at December 31, 2021. The weighted average yield on investments is
calculated based on the net interest earnings during the year divided by the
average investment balance throughout the year.

                                                                  Due after one year through five        Due after five years through
                                 Due in one year or less                       years                               ten years                       Due after ten years                 Equity securities                         Total
                                               Weighted                              Weighted                              Weighted                            Weighted                           Weighted                            Weighted
(Dollars in thousands)          Book Value   average yield          Book Value     average yield          Book Value     average yield         Book Value    average yield         Book Value   average yield         Book Value    average yield
Available for sale:
Government and Government Sponsored Entities:
Residential MBS and CMOs      $        -               -  %       $         21            1.59  %       $         69            2.69  %       $  200,043            1.27  %       $       -               -  %       $  200,133            1.27  %
Commercial MBS and CMOs                -               -  %             25,973            0.78  %             96,996            0.57  %          284,777            1.24  %               -               -  %          407,746            1.05  %
Agency bonds                           -               -  %                  -               -  %              7,715            0.76  %            3,116            0.76  %               -               -  %           10,831            0.76  %
Other ABS                              -               -  %                  -               -  %                  -               -  %           28,607            0.72  %               -               -  %           28,607            0.72  %
Held to maturity:
Government Sponsored Entities:
Residential MBS                        -               -  %                  -               -  %                                  -  %            3,761            3.12  %               -               -  %            3,761            3.12  %
Other investments                      -               -  %                  -               -  %                 68            3.88  %                -               -  %               -               -  %               68            3.88  %
Equity Securities                      -               -  %                  -               -  %                  -               -  %                -               -  %          11,693            1.15  %           11,693            1.15  %
Total                         $        -               -  %       $     25,994            0.78  %       $    104,848            0.59  %       $  520,304            1.23  %       $  11,693            1.15  %       $  662,839            1.11  %


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The following table shows the fair value of our securities:

                                                                         Gross                 Gross
                                                                      Unrealized            Unrealized
(Dollars in thousands)                       Amortized Cost              Gains                Losses             Fair Value
As of December 31, 2021:
Available for sale:
Government and Government Sponsored
Entities:
Residential MBS and CMOs                   $       200,775          $      1,225          $     (1,867)         $  200,133
Commercial MBS and CMOs                            407,111                 3,281                (2,646)            407,746
Agency bonds                                        10,587                   244                     -              10,831
Other ABS                                           28,720                    37                  (150)             28,607
Total available for sale                           647,193                 4,787                (4,663)            647,317
Held to maturity:
Government Sponsored Entities:
Residential MBS                                      3,761                   189                     -               3,950
Other investments                                       68                     -                     -                  68
Total held to maturity                               3,829                   189                     -               4,018
Equity securities                                   11,693                     -                     -              11,693
Total investment securities                $       662,715          $      4,976          $     (4,663)         $  663,028
As of December 31, 2020:
Available for sale:
Government and Government Sponsored
Entities:
Residential MBS and CMOs                   $       213,279          $      3,459          $        (14)         $  216,724
Commercial MBS and CMOs                            355,963                 6,337                  (312)            361,988
Agency bonds                                        14,998                    69                   (45)             15,022

Total available for sale                           584,240                 9,865                  (371)            593,734
Held to maturity:
Government Sponsored Entities:
Residential MBS                                      7,391                   403                     -               7,794
Other investments                                       76                     -                     -                  76
Total held to maturity                               7,467                   403                     -               7,870
Equity securities                                   12,037                     -                     -              12,037
Total investment securities                $       603,744          $    

10,268 ($371) $613,641


The unrealized losses on securities are attributed to interest rate changes
rather than the marketability of the securities or the issuer's ability to honor
redemption of the obligations, as the securities with losses are primarily
obligations of or guaranteed by agencies sponsored by the U.S. government. We
have adequate liquidity with the ability and intent to hold these securities to
maturity resulting in full recovery of the indicated impairment. Accordingly,
none of the unrealized losses on these securities have been determined to be
other than temporary.

AT December 31, 2021 and 2020, the estimated average remaining life of our available-for-sale investment portfolio was 5.30 years and 5.34 years, respectively.

Deposits

Representing 85.1% of our total liabilities as of December 31, 2021, 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.

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Total deposits increased by $273.9 million, or 5.2%, to $5.5 billion at
December 31, 2021 from $5.3 billion at December 31, 2020. Retail deposits
increased $298.1 million, while brokered deposits declined by $24.2 million. The
increase in retail deposits was primarily related to growth within our specialty
deposits, while the decrease in brokered deposits was a purposeful decision by
the Company to allow wholesale deposits to expire to reduce excess, low yielding
cash from the balance sheet that was partially the result of the expansion in
our retail deposits. During the year, the proportion of non-maturity deposits
within the portfolio increased to 57.8% compared to 41.9% at December 31, 2020,
while our portfolio of time deposits decreased to 42.2% from 58.1%,
respectively. The change in the composition of our deposit portfolio was
attributed to a combination of consumer preferences to maintain flexibility in
low interest rate environments, as well as our strategic goal of increasing
transaction accounts. We consider approximately 74.6% of our retail deposits at
December 31, 2021 to be core deposits based on our internal methodology, which
gives consideration to the tenure of customer relationships, product penetration
and the relative cost of the deposit accounts.

Our loan to deposit ratio was 114% and 115% at December 31, 2021 and 2020,
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.

The following table summarizes the composition of our deposits by average deposits and average rates paid for the years indicated:

                                                                  December 31, 2021                                                      December 31, 2020
                                                                     Weighted average         Percent of                                    Weighted average         Percent of
(Dollars in thousands)                       Average amount             rate paid           total deposits          Average amount             rate paid           total deposits
Noninterest-bearing deposit accounts       $        112,436                      -  %                2.1  %       $         69,208                      -  %                1.3  %
Interest-bearing transaction accounts               158,956                   0.22  %                2.9  %                178,655                   0.48  %                3.4  %
Money market demand accounts                      2,427,599                   0.48  %               44.5  %              1,652,109                   0.88  %               31.2  %
Time deposits                                     2,750,461                   0.84  %               50.5  %              3,390,992                   1.67  %               64.1  %
Total                                      $      5,449,452                   0.64  %              100.0  %       $      5,290,964                   1.36  %              100.0  %


The following table shows the maturity of term deposits at December 31, 2021:

(Dollars in thousands, except for column headings)          Insured         Uninsured
Remaining maturity:
Three months or less                                     $   520,585       $ 178,145
Over three through six months                                416,749        

81,665

Over six through twelve months                               777,727         180,961
Over twelve months                                           149,411          29,898
Total                                                    $ 1,864,472       $ 470,669
Percent of total deposits                                      33.67  %         8.50  %



The Company estimated its balance of uninsured deposits at approximately $1.4
billion at both December 31, 2021 and 2020. At the same dates, the Company had
$25.8 million and $50.0 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 decreased $55.1
million, or 6.8%, to $751.6 million at December 31, 2021 compared to $806.7
million at December 31, 2020. The decrease in FHLB advances outstanding at
December 31, 2021 as compared to the prior year, was due to maturing advances
not being replaced during the current year. As of both December 31, 2021 and
2020, the Bank had a FHLB letter of credit outstanding totaling $62.6 million.

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

                                 December 31, 2021                    December 31, 2020                  Date             Maturity                   Rate Index
       Issuer                 Amount             Rate              Amount             Rate              Issued              Date                 (Quarterly Reset)
(Dollars in
thousands)
Luther Burbank
Statutory Trust I          $  41,238              1.58  %       $  41,238              1.60  %         3/1/2006           6/15/2036                3 month LIBOR + 1.38%
Luther Burbank
Statutory Trust II         $  20,619              1.82  %       $  20,619              1.84  %         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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Contents

The following table presents information concerning our FHLB advances and other borrowings on the dates or for the periods indicated:

                                                              As of and for the Years Ended December 31,
(Dollars in thousands)                                              2021                         2020
FHLB advances
Average amount outstanding during the period              $            868,591            $        965,490

Maximum amount remaining due at any end of the month during the period

                                                           1,048,647                   1,040,199
Balance outstanding at end of period                                   751,647                     806,747
Weighted average maturity (in years)                                       2.3                         1.7
Weighted average interest rate at end of period                           1.68    %                   2.07  %
Weighted average interest rate during the period                          1.67    %                   2.25  %

Subordinated carry-forward debentures Outstanding balance at end of period

                      $             61,857            $         61,857
Weighted average maturity (in years)                                      15.0                        16.0
Weighted average interest rate at end of period                           1.66    %                   1.68  %
Weighted average interest rate during the period                          1.64    %                   2.22  %

Senior unsecured term notes
Balance outstanding at end of period                      $             94,662            $         94,539
Weighted average maturity (in years)                                       2.7                         3.8
Weighted average interest rate at end of period                           6.66    %                   6.67  %
Weighted average interest rate during the period                          6.66    %                   6.67  %



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 Years Ended December 31,
(Dollars in thousands)                                               2021                            2020
Outstanding at period end                                $                   -               $                -
Average amount outstanding                                             110,837                            6,724
Maximum amount outstanding at any month end                            346,900                           63,000

Weighted average interest rate:

   During period                                                          0.14       %                     1.43  %
   End of period                                                             -       %                        -  %


Stockholders' Equity

Stockholders' equity totaled $669.1 million and $613.7 million at December 31,
2021 and 2020, respectively. The increase in stockholders' equity was primarily
related to net income of $87.8 million, partially offset by dividends paid of
$18.5 million, stock repurchases of $8.8 million and a decline in the fair value
of available for sale investment securities, net of tax, of $6.6 million during
the year ended December 31, 2021.

During the year ended December 31, 2021, the Company repurchased 761,844 of its
shares in connection with its stock repurchase program at an average price of
$11.61 per share, or a 9.9% discount to tangible book value at December 31,
2021, and a total cost of $8.8 million. As of December 31, 2021, there were $9.7
million of authorized funds remaining under the current share repurchase
program.

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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.

                                                          December 31,
(Dollars in thousands)                                2021           2020

Financing commitments for loans and lines of credit $132,769 $116,944


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 $727 thousand
and $959 thousand at December 31, 2021 and 2020, respectively, which is included
in other liabilities and accrued expenses in the consolidated statements of
financial condition.

The Company entered into two new two-year swap agreements, with an aggregate
notional amount of $650 million during the year ended December 31, 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. The weighted
average fixed pay interest rate on the new swaps is 0.16%. 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 December 31, 2021, our significant
contractual obligations to third parties on debt and lease agreements and
service obligations. For more information about our contractual obligations, see
Part II, Item 8. "Financial Statements and Supplementary Data", Note 19.
''Commitments and Contingencies,'' in the notes to our consolidated financial
statements.
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                                                                                   Payments Due by Period
                                                                                                                   More than 5
(Dollars in thousands)                     Less than 1 Year           1 to 3 Years           3 to 5 Years             Years               Total
Contractual Cash Obligations
Time deposits (1)                        $       2,155,832          $     127,815          $      51,494          $        -          $ 2,335,141
FHLB advances (1)                                  100,000                450,000                201,500                 147              751,647
Senior debt (1)                                          -                 95,000                      -                   -               95,000
Junior subordinated debentures (1)                       -                      -                      -              61,857               61,857
Operating leases                                     3,962                  4,472                  2,322               1,148               11,904
Significant contract (2)                             1,744                  3,488                  2,367                   -                7,599
Total                                    $       2,261,538          $    

680 775 $257,683 $63,152 $3,263,148

(1) Amounts exclude interest (2) We have a large long-term contract for core processing services expiring May 9, 2026. The actual obligation is unknown and depends on certain factors, including volume and activities. For the purposes of this disclosure, future obligations are estimated using our 2021 average monthly spend 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

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

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Our total deposits at December 31, 2021 and 2020 were $5.5 billion and $5.3
billion, respectively. Based on the values of loans pledged as collateral, our
$751.6 million of FHLB advances outstanding and our $62.6 million FHLB letter of
credit outstanding, we had $963.5 million of additional borrowing capacity with
the FHLB at December 31, 2021. Based on the values of other loans pledged as
collateral, we had $211.3 million of borrowing capacity with the FRB at
December 31, 2021. There were no outstanding advances with the FRB at
December 31, 2021. 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 December 31, 2021, 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 $138.4 million at December 31, 2021.

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 December 31, 2021 and 2020, 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 December 31,
2021, 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
                                                                    For Capital Adequacy            Plus Capital Conservation             For Well- Capitalized
                                          Actual                          Purposes                            Buffer                           Institution
(Dollars in thousands)              Amount       Ratio               Amount        Ratio               Amount          Ratio               Amount         Ratio
Luther Burbank Corporation
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/AN/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
As of December 31, 2020
Tier 1 Leverage Ratio            $ 665,514         9.45  %       $   281,564        4.00  %                     N/A          N/A                   N/A          N/A
Common Equity Tier 1 Risk-Based
Ratio                              603,657        15.75  %           172,420        4.50  %       $      268,209         7.00  %                 

N/AN/A Tier risk-based capital ratio 1,665,514 17.37% 229,893 6.00%

              325,682         8.50  %                   N/A          N/A
Total Risk-Based Capital Ratio     712,837        18.60  %           306,524        8.00  %              402,313        10.50  %                   N/A          N/A

Luther Burbank Savings
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 risk-based capital ratio 1,799,457 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  %
As of December 31, 2020
Tier 1 Leverage Ratio            $ 729,054        10.36  %       $   281,453        4.00  %                     N/A          N/A       $    351,816         5.00  %
Common Equity Tier 1 Risk-Based
Ratio                              729,054        19.04  %           172,340        4.50  %       $      268,085         7.00  %            

248,936 6.50% Tier risk-based capital ratio 1,729,054 19.04% 229,787 6.00%

              325,532         8.50  %            

306,383 8.00% Total risk-based capital ratio 776,377 20.27% 306,383 8.00%

              402,128        10.50  %            

382,979 10.00%

Impact of inflation and price changes

Our 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.

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Luisa D. Fuller