Investment Securities

12 Months Ended

Dec. 31, 2020

Investments, Debt and Equity Securities [Abstract]

The Company’s investment policy is designed primarily to provide and maintain liquidity, generate a favorable return on assets without incurring undue interest rate and credit risk, and complement the Bank’s lending activities.

There were no securities classified as trading or held to maturity at December 31, 2020 or December 31, 2019.

(a) Securities by Type and Maturity

The following tables present the amortized cost and fair value of investment securities available for sale at the dates indicated and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:


	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
U.S. government and agency securities	$	44,713	$	947	$	—	$	45,660
Municipal securities	197,634		12,561		(227)		209,968

Residential CMO and MBS	196,956		5,125		(209)		201,872
Commercial CMO and MBS	290,638		13,198		(90)		303,746
Corporate obligations	10,971		125		—		11,096
Other asset-backed securities	29,283		565		(27)		29,821
Total	$	770,195	$	32,521	$	(553)	$	802,163


	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
U.S. government and agency securities	$	104,709	$	598	$	(84)	$	105,223
Municipal securities	128,183		4,933		(102)		133,014

Residential CMO and MBS	336,929		3,184		(505)		339,608
Commercial CMO and MBS	322,169		5,575		(649)		327,095
Corporate obligations	23,893		316		(15)		24,194
Other asset-backed securities	23,277		54		(153)		23,178
Total	$	939,160	$	14,660	$	(1,508)	$	952,312

For the years ended December 31, 2020 and 2019, there was no provision for credit loss on investment securities available for sale recorded in the Consolidated Statements of Income. There was no ACL on investment securities available for sale at December 31, 2020 and December 31, 2019.

The amortized cost and fair value of investment securities available for sale at December 31, 2020, by contractual maturity, are set forth below. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.


	Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	55,631	$	56,055
Due after one year through five years	138,458		145,562
Due after five years through ten years	209,381		220,191
Due after ten years	366,725		380,355

Total	$	770,195	$	802,163

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 stockholders’ equity at December 31, 2020 and December 31, 2019.

(b) Unrealized Losses and Other-Than-Temporary Impairments

The following tables show the gross unrealized losses and fair value of the Company's investment securities available for sale aggregated by investment category and length of time that the individual securities have been in continuous unrealized loss positions as of December 31, 2020 and December 31, 2019:


	December 31, 2020
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)

Municipal securities	10,264		(227)		—		—		10,264		(227)
Residential CMO and MBS	—		—		25,293		(209)		25,293		(209)
Commercial CMO and MBS	11,404		(29)		7,499		(61)		18,903		(90)

Other asset-backed securities	—		—		4,570		(27)		4,570		(27)
Total	$	21,668	$	(256)	$	37,362	$	(297)	$	59,030	$	(553)


	December 31, 2019
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
U.S. government and agency securities	$	45,999	$	(84)	$	—	$	—	$	45,999	$	(84)
Municipal securities	13,761		(102)		—		—		13,761		(102)

Residential CMO and MBS	14,272		(66)		60,232		(439)		74,504		(505)
Commercial CMO and MBS	56,263		(177)		43,623		(472)		99,886		(649)

Corporate obligations	998		(2)		1,987		(13)		2,985		(15)
Other asset-backed securities	14,383		(127)		1,609		(26)		15,992		(153)
Total	$	145,676	$	(558)	$	107,451	$	(950)	$	253,127	$	(1,508)

The Company has evaluated these investment securities available for sale as of December 31, 2020 and December 31, 2019 and determined that no ACL on investment securities available for sale is necessary. Unrealized losses on investment securities available for sale have not been recognized into earnings because the issuers of bonds are investment grade, the securities carry governmental guarantees, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds and the fair value is expected to recover as the bonds approach maturity.

The following table presents the gross realized gains and losses on the sale of investment securities available for sale for the years ended December 31, 2020, December 31, 2019 and December 31, 2018:


	Year ended December 31,
	2020		2019		2018
	(In thousands)
Gross realized gains	$	1,537	$	558	$	273
Gross realized losses	(19)		(228)		(136)
Net realized gains	$	1,518	$	330	$	137

(d) Pledged Securities

The following table summarizes the amortized cost and fair value of investment securities available for sale that are pledged as collateral for the following obligations at December 31, 2020 and December 31, 2019:


	December 31, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Washington and Oregon state public deposits	$	119,652	$	124,228	$	187,700	$	190,773

Securities sold under agreement to repurchase	38,630		39,945		22,156		22,294
Other securities pledged	29,665		30,717		19,333		19,850
Total	$	187,947	$	194,890	$	229,189	$	232,917

(e) Accrued Interest Receivable

Accrued interest receivable, excluded from amortized cost on investment securities available for sale, totaled $3.6 million and $3.7 million at December 31, 2020 and December 31, 2019, respectively. No amounts of accrued interest receivable on investment securities available for sale were reversed against interest income on investment securities available for sale during the years ended December 31, 2020 and December 31, 2019.