Luther Burbank Savings reports declines in Q4, 2022 earnings

The parent company of Luther Burbank Savings, set to be acquired this summer by a Seattle-based bank, on Tuesday reported an over 41% drop in fourth-quarter earnings over the same quarter last year.

Quarterly net income for Santa Rosa-based Luther Burbank Corp. (Nasdaq: LBC) was $13.68 million, down from $23.38 million in 2021’s ending quarter and $21 million in the third quarter. The bank closed out 2022 with earnings of $80.19 million, down 8.6% from $87.75 million for 2021.

Despite those declines, the bank reported an over 11% increase in assets to finish off 2022 with $8 billion.

Simone Lagomarsino, president and CEO, cited in a statement “pressure” on the company’s margin, resulting from “the unprecedented rising interest rate environment.”

“Given our liability sensitive balance sheet, the rapid rise in interest rates has had an even larger impact on our cost of funds,” she stated. The company suspended its quarterly earnings call, according to its news release.

Luther Burbank Savings specializes in income-property and residential loans. Total loans came in at $7 billion by year-end, an over 11% annual increase.

In November, Seattle-based Washington Federal Bank, also known as WaFd Bank, announced it was acquiring Luther Burbank Savings for $654 million in an all-stock deal.

Luther Burbank Savings operates 10 branches in Northern and Southern California, one in Washington and seven lending offices located throughout the West, including Oregon.

With assets of $21.7 billion, WaFd runs 201 branches in eight Western states. If approvals are met, WaFd expects to carry the one brand name at all the branches. There are “no plans” to close any of the branches, WaFd officials said.

WaFd also expects to retain front-line employees. It’s unclear at this point what will happen to upper management at Luther Burbank Savings. The Sonoma County-based financial institution declined to comment.

In December, Brad Goode, the Washington Federal chief marketing officer, told the Business Journal the two financial institutions share the same philosophies about banking, including the approach to “conservative lending” practices.

“We like everything about them, and we know how loved they are,” he said last month. “They sought us out for months.”

Luther Burbank Savings management did not confirm the claim.

WaFd Bank (Nasdaq: WAFD) on Jan. 12 reported $79.5 million in fourth-quarter earnings, up 58% year over year.