10-Q

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of May 3, 2023, there were 30,546,198 outstanding shares of the Registrant’s Common Stock.

Note 2 — Securities

The following is a summary of securities available for sale as of the dates indicated:


			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gain		Loss			Value
	(in thousands)
March 31, 2023
U.S. Treasury securities	$	56,174	$	79	$	(1,327	)	$	54,926
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential		532,117		152		(68,164	)		464,105
Mortgage-backed securities - commercial		61,489		—		(10,623	)		50,866
Collateralized mortgage obligations		112,021		69		(11,544	)		100,546
Debt securities		150,362		—		(9,994	)		140,368
Total U.S. government agency and sponsored agency obligations		855,989		221		(100,325	)		755,885
Municipal bonds-tax exempt		77,889		—		(9,999	)		67,890
Total securities available for sale	$	990,052	$	300	$	(111,651	)	$	878,701

December 31, 2022
U.S. Treasury securities	$	49,690	$	—	$	(1,664	)	$	48,026
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential		540,590		63		(75,501	)		465,152
Mortgage-backed securities - commercial		61,799		—		(10,507	)		51,292
Collateralized mortgage obligations		98,236		—		(12,751	)		85,485
Debt securities		150,338		—		(11,839	)		138,499
Total U.S. government agency and sponsored agency obligations		850,963		63		(110,598	)		740,428
Municipal bonds-tax exempt		78,143		—		(12,759	)		65,384
Total securities available for sale	$	978,796	$	63	$	(125,021	)	$	853,838

The amortized cost and estimated fair value of securities as of March 31, 2023 and December 31, 2022, by contractual or expected maturity, are shown below. Collateralized mortgage obligations are included in the table shown below based on their expected maturities. All other securities are included based on their contractual maturities.


	March 31, 2023				December 31, 2022
	Available for Sale				Available for Sale
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
	(in thousands)
Within one year	$	35,558	$	35,134	$	28,665	$	28,043
Over one year through five years		187,050		175,950		180,322		167,000
Over five years through ten years		61,568		56,330		39,213		35,318
Over ten years		705,876		611,287		730,596		623,477
Total	$	990,052	$	878,701	$	978,796	$	853,838

The following table summarizes debt securities available-for-sale in an unrealized loss position for which an allowance for credit losses has not been recorded at March 31, 2023 and December 31, 2022, aggregated by major security type and length of time in a continuous unrealized loss position:


	Holding Period
	Less than 12 Months							12 Months or More							Total
	Gross			Estimated		Number		Gross			Estimated		Number		Gross			Estimated		Number
	Unrealized			Fair		of		Unrealized			Fair		of		Unrealized			Fair		of
	Loss			Value		Securities		Loss			Value		Securities		Loss			Value		Securities
	(in thousands, except number of securities)
March 31, 2023
U.S. Treasury securities	$	(186	)	$	24,606		11	$	(1,141	)	$	17,823		5	$	(1,327	)	$	42,429		16
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential		(989	)		30,094		16		(67,175	)		422,817		107		(68,164	)		452,911		123
Mortgage-backed securities - commercial		(65	)		4,094		1		(10,558	)		46,772		14		(10,623	)		50,866		15
Collateralized mortgage obligations		(426	)		18,991		5		(11,118	)		66,075		23		(11,544	)		85,066		28
Debt securities		(92	)		13,834		4		(9,902	)		126,534		26		(9,994	)		140,368		30
Total U.S. government agency and sponsored agency obligations		(1,572	)		67,013		26		(98,753	)		662,198		170		(100,325	)		729,211		196
Municipal bonds-tax exempt		—			—		—		(9,999	)		67,890		19		(9,999	)		67,890		19
Total	$	(1,758	)	$	91,619		37	$	(109,893	)	$	747,911		194	$	(111,651	)	$	839,530		231

December 31, 2022
U.S. Treasury securities	$	(414	)	$	33,812		14	$	(1,250	)	$	14,215		4	$	(1,664	)	$	48,027		18
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential		(1,712	)		36,009		18		(73,789	)		424,302		105		(75,501	)		460,311		123
Mortgage-backed securities - commercial		(84	)		4,069		1		(10,423	)		47,221		14		(10,507	)		51,290		15
Collateralized mortgage obligations		(1,011	)		23,606		8		(11,740	)		61,879		20		(12,751	)		85,485		28
Debt securities		(1,103	)		31,714		8		(10,736	)		106,785		22		(11,839	)		138,499		30
Total U.S. government agency and sponsored agency obligations		(3,910	)		95,398		35		(106,688	)		640,187		161		(110,598	)		735,585		196
Municipal bonds-tax exempt		—			—		—		(12,759	)		65,385		19		(12,759	)		65,385		19
Total	$	(4,324	)	$	129,210		49	$	(120,697	)	$	719,787		184	$	(125,021	)	$	848,997		233

The Company evaluates its available-for-sale securities portfolio for impairment on a quarterly basis. The Company did not recognize unrealized losses in income because we have the ability and the intent to hold and we do not expect to be required to sell these securities until the recovery of their cost basis. The quarterly impairment assessment takes into account the changes in the credit quality of these debt securities since acquisition and the likelihood of a credit loss occurring over the life of the securities. In the event that a credit loss is expected to occur in the future, an allowance is established and a corresponding credit loss is recognized. Based on this analysis, as of March 31, 2023, the Company determined that no credit losses are expected to be realized on the tax-exempt municipal bond portfolio. The remainder of the portfolio consists of U.S. Treasury obligations, U.S. government agency securities, and U.S. government sponsored agency securities, all of which have the backing of the U.S. government, and are therefore not expected to incur credit losses.

Securities available for sale with market values of $22.9 million and $23.4 million as of March 31, 2023 and December 31, 2022, respectively, were pledged to secure borrowings from the Federal Reserve Bank (“FRB”) Discount Window and the new Bank Term Funding Program (“BTFP”).

At March 31, 2023, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies in an amount greater than 10% of shareholders’ equity.

Note 3 — Loans

Loans Receivable

Loans consisted of the following as of the dates indicated:


	March 31, 2023			December 31, 2022
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,052,353		$	1,023,608
Hospitality		669,012			646,893
Office		533,703			499,946
Other (1)		1,415,748			1,553,729
Total commercial property loans		3,670,816			3,724,176
Construction		113,360			109,205
Residential (2)		817,917			734,472
Total real estate loans		4,602,093			4,567,853
Commercial and industrial loans (3)		778,149			804,492
Equipment financing agreements		600,216			594,788
Loans receivable		5,980,458			5,967,133
Allowance for credit losses		(72,249	)		(71,523	)
Loans receivable, net	$	5,908,209		$	5,895,610

(1)

Includes mixed-use, multifamily, industrial, gas stations, faith-based facilities, medical and warehouse; all other property types represent less than one percent of total loans receivable.

(2)

Includes $2.4 million and $2.4 million of home equity loans and lines, and $6.7 million and $4.6 of personal loans at March 31, 2023 and December 31, 2022, respectively.

(3)

At March 31, 2023 and December 31, 2022, Paycheck Protection Program loans were $0.7 million and $0.9 million, respectively.

Accrued interest on loans was $16.4 million and $16.0 million at March 31, 2023 and December 31, 2022, respectively.

At March 31, 2023 and December 31, 2022, loans of $2.43 billion and $1.99 billion, respectively, were pledged to secure advances from the FHLB.

Loans Held for Sale

The following is the activity for loans held for sale for the three months ended March 31, 2023 and 2022:


	Real Estate			Commercial and Industrial			Total
	(in thousands)
March 31, 2023
Balance at beginning of period	$	3,775		$	4,268		$	8,043
Originations and transfers		16,387			8,929			25,316
Sales		(19,781	)		(9,918	)		(29,699	)
Principal paydowns and amortization		(2	)		(6	)		(8	)
Balance at end of period	$	379		$	3,273		$	3,652

March 31, 2022
Balance at beginning of period	$	6,954		$	6,388		$	13,342
Originations and transfers		20,164			11,689			31,853
Sales		(15,293	)		(14,284	)		(29,577	)
Principal paydowns and amortization		—			(1	)		(1	)
Balance at end of period	$	11,825		$	3,792		$	15,617

Loans held for sale was comprised of $3.7 million and $8.0 million of the guaranteed portion of SBA 7(a) loans at March 31, 2023 and December 31, 2022, respectively.

Allowance for Credit Losses

The following table details the information on the allowance for credit losses by portfolio segment as of and for the three months ended March 31, 2023 and 2022:


	Real Estate			Commercial and Industrial			Equipment Financing Agreements			Total
	(in thousands)
March 31, 2023
Balance at beginning of period	$	44,026		$	15,267		$	12,230		$	71,523
Charge-offs		(412	)		(210	)		(1,616	)		(2,238	)
Recoveries		68			235			480			783
Provision (recovery) for credit losses		(151	)		41			2,291			2,181
Ending balance	$	43,531		$	15,333		$	13,385		$	72,249

March 31, 2022
Balance at beginning of period	$	48,890		$	12,418		$	11,249		$	72,557
Charge-offs		(530	)		(58	)		(247	)		(835	)
Recoveries		197			317			423			937
Provision (recovery) for credit losses		(2,202	)		267			788			(1,147	)
Ending balance	$	46,355		$	12,944		$	12,213		$	71,512

The table below illustrates the allowance for credit losses by loan portfolio segment and each loan portfolio segment as a percentage of total loans.


	March 31, 2023										December 31, 2022
	Allowance Amount		Percentage of Total Allowance			Total Loans		Percentage of Total Loans			Allowance Amount		Percentage of Total Allowance			Total Loans		Percentage of Total Loans
	(dollars in thousands)
Real estate loans:
Commercial property
Retail	$	9,405		13.0	%	$	1,052,353		17.6	%	$	7,872		11.0	%	$	1,023,608		17.2	%
Hospitality		14,138		19.6			669,012		11.2			13,407		18.7			646,893		10.8
Office		2,509		3.5			533,703		8.9			2,293		3.2			499,946		8.4
Other		9,186		12.7			1,415,748		23.7			13,056		18.3			1,553,729		26.0
Total commercial property loans		35,238		48.8			3,670,816		61.4			36,628		51.2			3,724,176		62.4
Construction		4,003		5.5			113,360		1.9			4,022		5.7			109,205		1.8
Residential		4,290		6.0			817,917		13.7			3,376		4.7			734,472		12.4
Total real estate loans		43,531		60.3			4,602,093		77.0			44,026		61.6			4,567,853		76.6
Commercial and industrial loans		15,333		21.2			778,149		13.0			15,267		21.3			804,492		13.4
Equipment financing agreements		13,385		18.5			600,216		10.0			12,230		17.1			594,788		10.0
Total	$	72,249		100.0	%	$	5,980,458		100.0	%	$	71,523		100.0	%	$	5,967,133		100.0	%

The following table represents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2023 and December 31, 2022, for which repayment is expected to be obtained through the sale of the underlying collateral.


	March 31, 2023		December 31, 2022
	Amortized Cost		Amortized Cost
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,883	$	1,930
Hospitality		—		—
Office		—		—
Other (1)		259		256
Total commercial property loans		2,142		2,186
Residential		487		508
Total real estate loans		2,629		2,694
Commercial and industrial loans		10,002		—
Total	$	12,631	$	2,694

(1)

Includes mixed-use, multifamily, industrial, gas stations, faith-based facilities, medical and warehouse; all other property types represent less than one percent of total loans receivable.

Loan Quality Indicators

As part of the on-going monitoring of the quality of our loans portfolio, we utilize an internal loan grading system to identify credit risk and assign an appropriate grade (from 0 to 8) for each loan in our portfolio. A third-party loan review is performed at least on an annual basis. Additional adjustments are made when determined to be necessary. The loan grade definitions are as follows:

Pass and Pass-Watch: Pass and Pass-Watch loans, grades (0-4), are in compliance with the Bank’s credit policy and regulatory requirements, and do not exhibit any potential or defined weaknesses as defined under “Special Mention,” “Substandard” or “Doubtful.” This category is the strongest level of the Bank’s loan grading system. It consists of all performing loans with no identified credit weaknesses. It includes cash and stock/security secured loans or other investment grade loans.

Special Mention: A Special Mention loan, grade (5), has potential weaknesses that deserve management’s close attention. If not corrected, these potential weaknesses may result in deterioration of the repayment of the debt and result in a Substandard classification. Loans that have significant actual, not potential, weaknesses are considered more severely classified.

Substandard: A Substandard loan, grade (6), has a well-defined weakness that jeopardizes the liquidation of the debt. A loan graded Substandard is not protected by the sound worth and paying capacity of the borrower, or of the value and type of collateral pledged. With a Substandard loan, there is a distinct possibility that the Bank will sustain some loss if the weaknesses or deficiencies are not corrected.

Doubtful: A Doubtful loan, grade (7), is one that has critical weaknesses that would make the collection or liquidation of the full amount due improbable. However, there may be pending events which may work to strengthen the loan, and therefore the amount or timing of a possible loss cannot be determined at the current time.

Loss: A loan classified as Loss, grade (8), is considered uncollectible and of such little value that their continuance as active bank assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be possible in the future. Loans classified as Loss will be charged off in a timely manner.

Under regulatory guidance, loans graded special mention or worse are considered criticized loans, and loans graded substandard or worse are considered classified loans.

Loans by Vintage Year and Risk Rating


	Term Loans
	Amortized Cost Basis by Origination Year (1)
	2023		2022			2021			2020			2019		Prior			Revolving Loans Amortized Cost Basis		Total
	(in thousands)
March 31, 2023
Real estate loans:
Commercial property
Risk Rating									`
Pass / Pass-Watch	$	194,981	$	1,064,796		$	882,494		$	587,432		$	393,738	$	443,388		$	40,472	$	3,607,301
Special Mention		—		1,579			20,228			5,820			1,596		3,793			1,700		34,716
Classified		1,272		9,401			4,846			261			4,289		8,730			—		28,799
Total commercial property		196,253		1,075,776			907,568			593,513			399,623		455,911			42,172		3,670,816
YTD gross charge-offs		—		—			—			412			—		—			—		412
YTD net charge-offs		—		—			—			412			—		(67	)		—		345

Construction
Risk Rating
Pass / Pass-Watch		61,150		5,549			46,661			—			—		—			—		113,360
Special Mention		—		—			—			—			—		—			—		—
Classified		—		—			—			—			—		—			—		—
Total construction		61,150		5,549			46,661			—			—		—			—		113,360
YTD gross charge-offs		—		—			—			—			—		—			—		—
YTD net charge-offs		—		—			—			—			—		—			—		—

Residential
Risk Rating
Pass / Pass-Watch		94,413		400,059			169,111			13,007			228		132,970			7,624		817,412
Special Mention		—		—			—			—			—		—			500		500
Classified		—		—			—			—			—		5			—		5
Total residential		94,413		400,059			169,111			13,007			228		132,975			8,124		817,917
YTD gross charge-offs		—		—			—			—			—		—			—		—
YTD net charge-offs		—		—			—			—			—		(1	)		—		(1	)

Total real estate loans
Risk Rating
Pass / Pass-Watch		350,544		1,470,404			1,098,266			600,439			393,966		576,358			48,096		4,538,073
Special Mention		—		1,579			20,228			5,820			1,596		3,793			2,200		35,216
Classified		1,272		9,401			4,846			261			4,289		8,735			—		28,804
Total real estate loans		351,816		1,481,384			1,123,340			606,520			399,851		588,886			50,296		4,602,093
YTD gross charge-offs		—		—			—			412			—		—			—		412
YTD net charge-offs		—		—			—			412			—		(68	)		—		344

Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch		134,247		224,285			102,649			37,591			22,070		17,962			198,428		737,232
Special Mention		—		—			8,998			—			—		126			20,000		29,124
Classified		—		940			—			—			85		273			10,495		11,793
Total commercial and industrial loans		134,247		225,225			111,647			37,591			22,155		18,361			228,923		778,149
YTD gross charge-offs		—		—			—			—			20		190			—		210
YTD net charge-offs		—		(13	)		(2	)		—			20		(30	)		—		(25	)

Equipment financing agreements:
Risk Rating
Pass / Pass-Watch		65,243		285,484			146,563			40,374			42,570		13,292			—		593,526
Special Mention		—		—			—			—			—		—			—		—
Classified		—		1,484			3,130			451			1,143		482			—		6,690
Total equipment financing agreements		65,243		286,968			149,693			40,825			43,713		13,774			—		600,216
YTD gross charge-offs		—		176			935			—			358		147			—		1,616
YTD net charge-offs		—		176			840			(6	)		154		(28	)		—		1,136

Total loans receivable:
Risk Rating
Pass / Pass-Watch		550,034		1,980,173			1,347,478			678,404			458,606		607,612			246,524		5,868,831
Special Mention		—		1,579			29,226			5,820			1,596		3,919			22,200		64,340
Classified		1,272		11,825			7,976			712			5,517		9,490			10,495		47,287
Total loans receivable	$	551,306	$	1,993,577		$	1,384,680		$	684,936		$	465,719	$	621,021		$	279,219	$	5,980,458
YTD gross charge-offs		—		176			935			412			378		337			—		2,238
YTD net charge-offs		—		163			838			406			174		(126	)		—		1,455

(1)

Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision.


	Term Loans
	Amortized Cost Basis by Origination Year (1)
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total

December 31, 2022
Real estate loans:
Commercial property
Risk Rating
Pass / Pass-Watch	$	1,184,361	$	901,029	$	600,740	$	404,786	$	301,950	$	207,861	$	50,877	$	3,651,604
Special Mention		847		13,384		5,857		7,115		—		6,080		1,701		34,984
Classified		—		—		412		4,312		12,304		20,560		—		37,588
Total commercial property		1,185,208		914,413		607,009		416,213		314,254		234,501		52,578		3,724,176

Construction
Risk Rating
Pass / Pass-Watch		41,662		67,543		—		—		—		—		—		109,205
Special Mention		—		—		—		—		—		—		—		—
Classified		—		—		—		—		—		—		—		—
Total construction		41,662		67,543		—		—		—		—		—		109,205

Residential
Risk Rating
Pass / Pass-Watch		405,975		173,236		13,102		232		731		134,766		5,422		733,464
Special Mention		—		—		—		—		—		—		500		500
Classified		12		—		—		—		—		496		—		508
Total residential		405,987		173,236		13,102		232		731		135,262		5,922		734,472

Total real estate loans
Risk Rating
Pass / Pass-Watch		1,631,998		1,141,808		613,842		405,018		302,681		342,627		56,299		4,494,273
Special Mention		847		13,384		5,857		7,115		—		6,080		2,201		35,484
Classified		12		—		412		4,312		12,304		21,056		—		38,096
Total real estate loans		1,632,857		1,155,192		620,111		416,445		314,985		369,763		58,500		4,567,853

Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch		368,778		100,537		39,577		24,117		7,342		12,282		205,951		758,584
Special Mention		—		9,285		—		—		29		102		34,113		43,529
Classified		—		—		171		1,097		81		391		639		2,379
Total commercial and industrial loans		368,778		109,822		39,748		25,214		7,452		12,775		240,703		804,492

Equipment financing agreements:
Risk Rating
Pass / Pass-Watch		305,249		165,313		46,970		52,133		17,608		1,798		—		589,071
Special Mention		—		—		—		—		—		—		—		—
Classified		630		2,542		311		1,581		565		88		—		5,717
Total equipment financing agreements		305,879		167,855		47,281		53,714		18,173		1,886		—		594,788

Total loans receivable:
Risk Rating
Pass / Pass-Watch		2,306,025		1,407,658		700,389		481,268		327,631		356,707		262,250		5,841,928
Special Mention		847		22,669		5,857		7,115		29		6,182		36,314		79,013
Classified		642		2,542		894		6,990		12,950		21,535		639		46,192
Total loans receivable	$	2,307,514	$	1,432,869	$	707,140	$	495,373	$	340,610	$	384,424	$	299,203	$	5,967,133

(1)

Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision.

Loans by Vintage Year and Payment Performance


	Term Loans
	Amortized Cost Basis by Origination Year (1)
	2023		2022			2021			2020			2019		Prior			Revolving Loans Amortized Cost Basis		Total
	(in thousands)
March 31, 2023
Real estate loans:
Commercial property
Payment performance
Performing	$	196,253	$	1,075,696		$	907,568		$	593,252		$	399,623	$	453,511		$	42,172	$	3,668,075
Nonperforming		—		80			—			261			—		2,400			—		2,741
Total commercial property		196,253		1,075,776			907,568			593,513			399,623		455,911			42,172		3,670,816
YTD gross charge-offs		—		—			—			412			—		—			—		412
YTD net charge-offs		—		—			—			412			—		(67	)		—		345

Construction
Payment performance
Performing		61,150		5,549			46,661			—			—		—			—		113,360
Nonperforming		—		—			—			—			—		—			—		—
Total construction		61,150		5,549			46,661			—			—		—			—		113,360
YTD gross charge-offs		—		—			—			—			—		—			—		—
YTD net charge-offs		—		—			—			—			—		—			—		—

Residential
Payment performance
Performing		94,413		400,059			169,111			13,007			228		132,483			8,124		817,425
Nonperforming		—		—			—			—			—		492			—		492
Total residential		94,413		400,059			169,111			13,007			228		132,975			8,124		817,917
YTD gross charge-offs		—		—			—			—			—		—			—		—
YTD net charge-offs		—		—			—			—			—		(1	)		—		(1	)

Total real estate loans
Payment performance
Performing		351,816		1,481,304			1,123,340			606,259			399,851		585,994			50,296		4,598,860
Nonperforming		—		80			—			261			—		2,892			—		3,233
Total real estate loans		351,816		1,481,384			1,123,340			606,520			399,851		588,886			50,296		4,602,093
YTD gross charge-offs		—		—			—			412			—		—			—		412
YTD net charge-offs		—		—			—			412			—		(68	)		—		344

Commercial and industrial loans:
Payment performance
Performing		134,247		225,225			111,647			37,591			22,149		18,242			218,921		768,022
Nonperforming		—		—			—			—			6		119			10,002		10,127
Total commercial and industrial loans		134,247		225,225			111,647			37,591			22,155		18,361			228,923		778,149
YTD gross charge-offs		—		—			—			—			20		190			—		210
YTD net charge-offs		—		(13	)		(2	)		—			20		(30	)		—		(25	)

Equipment financing agreements:
Payment performance
Performing		65,243		285,484			146,563			40,374			42,570		13,292			—		593,526
Nonperforming		—		1,484			3,130			451			1,143		482			—		6,690
Total equipment financing agreements		65,243		286,968			149,693			40,825			43,713		13,774			—		600,216
YTD gross charge-offs		—		176			935			—			358		147			—		1,616
YTD net charge-offs		—		176			840			(6	)		154		(28	)		—		1,136

Total loans receivable:
Payment performance
Performing		551,306		1,992,013			1,381,550			684,224			464,570		617,528			269,217		5,960,408
Nonperforming		—		1,564			3,130			712			1,149		3,493			10,002		20,050
Total loans receivable	$	551,306	$	1,993,577		$	1,384,680		$	684,936		$	465,719	$	621,021		$	279,219	$	5,980,458
YTD gross charge-offs		—		176			935			412			378		337			—		2,238
YTD net charge-offs		—		163			838			406			174		(126	)		—		1,455

(1)

Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision.


	Term Loans
	Amortized Cost Basis by Origination Year (1)
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total

December 31, 2022
Real estate loans:
Commercial property
Payment performance
Performing	$	1,185,208	$	914,413	$	606,597	$	416,213	$	312,324	$	233,643	$	52,578	$	3,720,976
Nonperforming		—		—		412		—		1,930		858				3,200
Total commercial property		1,185,208		914,413		607,009		416,213		314,254		234,501		52,578		3,724,176

Construction
Payment performance
Performing		41,662		67,543		—		—		—		—		—		109,205
Nonperforming		—		—		—		—		—		—		—		—
Total construction


Delaware		95-4788120
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)


900 Wilshire Boulevard, Suite 1250
Los Angeles, California		90017
(Address of Principal Executive Offices)		(Zip Code)


	Part I – Financial Information

Item 1.	Financial Statements	3

	Consolidated Balance Sheets at March 31, 2023 (unaudited) and December 31, 2022	3

	Consolidated Statements of Income for the three months ended March 31, 2023 and 2022 (unaudited)	4

	Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2023 and 2022 (unaudited)	5

	Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2023 and 2022 (unaudited)	6

	Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)	7

	Notes to Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52

Item 4.	Controls and Procedures	52

	Part II – Other Information

Item 1.	Legal Proceedings	53

Item 1A.	Risk Factors	53

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 3.	Defaults Upon Senior Securities	54

Item 4.	Mine Safety Disclosures	54

Item 5.	Other Information	54

Item 6.	Exhibits	55

Signatures		56


	March 31,			December 31,
	2023			2022
	(Unaudited)
Assets
Cash and due from banks	$	386,201		$	352,421
Securities available for sale, at fair value (amortized cost of $990,052 and $978,796 as of March 31, 2023 and December 31, 2022, respectively)		878,701			853,838
Loans held for sale, at the lower of cost or fair value		3,652			8,043
Loans receivable, net of allowance for credit losses of $72,249 and $71,523 as of March 31, 2023 and December 31, 2022, respectively		5,908,209			5,895,610
Accrued interest receivable		19,004			18,537
Premises and equipment, net		22,625			22,850
Customers' liability on acceptances		41			328
Servicing assets		7,541			7,176
Goodwill and other intangible assets, net		11,193			11,225
Federal Home Loan Bank ("FHLB") stock, at cost		16,385			16,385
Income tax assets		39,658			51,924
Bank-owned life insurance		55,814			55,544
Prepaid expenses and other assets		85,106			84,381
Total assets	$	7,434,130		$	7,378,262

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Noninterest-bearing	$	2,334,083		$	2,539,602
Interest-bearing		3,866,955			3,628,470
Total deposits		6,201,038			6,168,072
Accrued interest payable		20,512			7,792
Bank's liability on acceptances		41			328
Borrowings		350,000			350,000
Subordinated debentures ($136,800 and $136,800 face amount less unamortized discount and debt issuance costs of $7,242 and $7,391 as of March 31, 2023 and December 31, 2022, respectively)		129,558			129,409
Accrued expenses and other liabilities		70,816			85,146
Total liabilities		6,771,965			6,740,747
Stockholders’ equity:
Preferred stock, $0.001 par value; authorized 10,000,000 shares; no shares issued as of March 31, 2023 and December 31, 2022		—			—
Common stock, $0.001 par value; authorized 62,500,000 shares; issued 33,827,801 shares (30,555,287 shares outstanding) and 33,708,234 shares (30,485,621 shares outstanding) as of March 31, 2023 and December 31, 2022, respectively		33			33
Additional paid-in capital		584,884			583,410
Accumulated other comprehensive loss, net of tax benefit of $32,292 and $35,973 as of March 31, 2023 and December 31, 2022, respectively		(79,059	)		(88,985	)
Retained earnings		283,910			269,542
Less treasury stock; 3,272,514 shares and 3,222,613 shares as of March 31, 2023 and December 31, 2022, respectively		(127,603	)		(126,485	)
Total stockholders’ equity		662,165			637,515
Total liabilities and stockholders’ equity	$	7,434,130		$	7,378,262


	Three Months Ended
	March 31,
	2023		2022
Interest and dividend income:
Interest and fees on loans receivable	$	80,923	$	53,924
Interest on securities		4,025		2,516
Dividends on FHLB stock		289		248
Interest on deposits in other banks		2,066		216
Total interest and dividend income		87,303		56,904
Interest expense:
Interest on deposits		25,498		2,013
Interest on borrowings		2,369		337
Interest on subordinated debentures		1,583		3,598
Total interest expense		29,450		5,948
Net interest income before credit loss expense		57,853		50,956
Credit loss expense (recovery)		2,133		(1,375	)
Net interest income after credit loss expense (recovery)		55,720		52,331
Noninterest income:
Service charges on deposit accounts		2,579		2,875
Trade finance and other service charges and fees		1,258		1,142
Gain on sale of Small Business Administration ("SBA") loans		1,869		2,521
Other operating income		2,630		1,982
Total noninterest income		8,336		8,520
Noninterest expense:
Salaries and employee benefits		20,610		17,717
Occupancy and equipment		4,412		4,646
Data processing		3,253		3,236
Professional fees		1,335		1,430
Supplies and communications		676		665
Advertising and promotion		833		817
Other operating expenses		1,672		3,181
Total noninterest expense		32,791		31,692
Income before tax		31,265		29,159
Income tax expense		9,274		8,464
Net income	$	21,991	$	20,695
Basic earnings per share	$	0.72	$	0.68
Diluted earnings per share	$	0.72	$	0.68
Weighted-average shares outstanding:
Basic		30,347,325		30,254,212
Diluted		30,430,745		30,377,580


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging Growth Company	☐


	Common Stock - Number of Shares								Stockholders' Equity
													Accumulated
											Additional		Other						Treasury			Total
	Shares		Treasury			Shares			Common		Paid-in		Comprehensive			Retained			Stock,			Stockholders'
	Issued		Shares			Outstanding			Stock		Capital		Income (Loss)			Earnings			at Cost			Equity
Balance at January 1, 2022		33,603,839		(3,196,578	)		30,407,261		$	33	$	580,796	$	(8,443	)	$	196,784		$	(125,753	)	$	643,417
Restricted stock awards, net of forfeitures		66,358		—			66,358			—		—		—			—			—			—
Share-based compensation expense		—		—			—			—		541		—			—			—			541
Restricted stock surrendered due to employee tax liability		—		(5,161	)		(5,161	)		—		—		—			—			(134	)		(134	)
Cash dividends paid (common stock, $0.22/share)		—		—			—			—		—		—			(6,691	)		—			(6,691	)
Net income		—		—			—			—		—		—			20,695			—			20,695
Change in unrealized gain (loss) on securities available for sale, net of income taxes		—		—			—			—		—		(36,376	)		—			—			(36,376	)
Balance at March 31, 2022		33,670,197		(3,201,739	)		30,468,458		$	33	$	581,337	$	(44,819	)	$	210,788		$	(125,887	)	$	621,452

Balance at January 1, 2023		33,708,234		(3,222,613	)		30,485,621		$	33	$	583,410	$	(88,985	)	$	269,542		$	(126,485	)	$	637,515
Stock options exercised		50,000		(35,273	)		14,727			—		822		—			—			(1,003	)		(181	)
Restricted stock awards, net of forfeitures		69,567		—			69,567			—		—		—			—			—			—
Share-based compensation expense		—		—			—			—		652		—			—			—			652
Restricted stock surrendered due to employee tax liability		—		(11,392	)		(11,392	)		—		—		—			—			(40	)		(40	)
Options surrendered due to employee tax liability		—		(3,236	)		(3,236	)		—		—		—			—			(75	)		(75	)
Cash dividends paid (common stock, $0.25/share)		—		—			—			—		—		—			(7,623	)		—			(7,623	)
Net income		—		—			—			—		—		—			21,991			—			21,991
Change in unrealized gain (loss) on securities available for sale, net of income taxes		—		—			—			—		—		9,926			—			—			9,926
Balance at March 31, 2023		33,827,801		(3,272,514	)		30,555,287		$	33	$	584,884	$	(79,059	)	$	283,910		$	(127,603	)	$	662,165


	Three Months Ended March 31,
	2023			2022
Cash flows from operating activities:
Net income	$	21,991		$	20,695
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,742			6,024
Amortization of servicing assets - net		634			544
Share-based compensation expense		652			541
Credit loss expense (recovery)		2,133			(1,375	)
Gain on sales of SBA loans		(1,869	)		(2,521	)
Origination of SBA loans held for sale		(25,316	)		(31,853	)
Proceeds from sales of SBA loans		30,954			32,098
Change in bank-owned life insurance		(270	)		(244	)
Change in prepaid expenses and other assets		(3,000	)		(13,745	)
Change in income tax assets		8,585			7,908
Valuation adjustment on servicing assets		(384	)		—
Change in accrued interest payable and other liabilities		276			2,062
Net cash provided by (used in) operating activities		36,128			20,134
Cash flows from investing activities:
Purchases of securities available for sale		(29,504	)		(52,475	)
Proceeds from matured, called and repayment of securities		17,499			32,730
Purchases of loans receivable		—			(11,000	)
Purchases of premises and equipment		(617	)		(617	)
Change in loans receivable, excluding purchases		(14,773	)		(175,522	)
Net cash provided by (used in) investing activities		(27,395	)		(206,884	)
Cash flows from financing activities:
Change in deposits		32,966			(3,099	)
Change in borrowings		—			(12,500	)
Redemption of subordinated debentures, net of treasury debentures		—			(87,300	)
Proceeds from exercise of stock options		822			—
Cash paid for surrender of vested shares due to employee tax liability		(1,118	)		(134	)
Cash dividends paid		(7,623	)		(6,691	)
Net cash provided by (used in) financing activities		25,047			(109,724	)
Net increase (decrease) in cash and due from banks		33,780			(296,474	)
Cash and due from banks at beginning of year		352,421			608,965
Cash and due from banks at end of period	$	386,201		$	312,491
Supplemental disclosures of cash flow information:
Interest paid	$	16,730		$	6,143
Income taxes paid	$	334		$	129
Non-cash activities:
Income tax benefit related to items of other comprehensive income	$	(3,681	)	$	15,787
Change in right-of-use asset obtained in exchange for lease liability	$	(145	)	$	—