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Investment Securities

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment Securities

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.

During the three months ended September 30, 2021, the Company reassessed and transferred, at fair value, $244.8 million of U.S. government and agency securities from the available for sale classification to the held to maturity classification. The net unrealized after tax gain of $1.3 million remained in AOCI to be amortized over the remaining life of the securities, offsetting the related amortization of discount or premium on the transferred securities. No gains or losses were recognized at the time of the transfer.

There were no investment securities classified as trading at December 31, 2021 or December 31, 2020. There were no investment securities classified as held to maturity at December 31, 2020.

(a) Investment Securities by Classification Type and Maturity

The following tables present the amortized cost and fair value of investment securities at the dates indicated and the corresponding amounts of gross unrealized gains and losses, including the corresponding amounts of gross unrealized gains and losses on investment securities available for sale recognized in AOCI:

			December 31, 2021
			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
			(In thousands)
Investment securities available for sale:
U.S. government and agency securities			$	21,494					$	55					$	(176)					$	21,373
Municipal securities			213,158						8,908						(854)						221,212
Residential CMO and MBS			307,366						2,111						(2,593)						306,884

			December 31, 2021
			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
			(In thousands)
Commercial CMO and MBS			313,169						3,891						(1,199)						315,861
Corporate obligations			2,007						7						—						2,014
Other asset-backed securities			26,638						369						(16)						26,991
Total			$	883,832					$	15,341					$	(4,838)					$	894,335
Investment securities held to maturity:
U.S. government and agency securities			$	141,011					$	120					$	(1,768)					$	139,363
Residential CMO and MBS			24,529						—						(153)						24,376
Commercial CMO and MBS			217,853						—						(5,261)						212,592
Total			$	383,393					$	120					$	(7,182)					$	376,331

			December 31, 2020
			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses												Fair Value
			(In thousands)
Investment securities available for sale:
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

The amortized cost and fair value of investment securities at December 31, 2021, 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.

			Securities Available for Sale												Securities Held to Maturity
			Amortized Cost						Fair Value						Amortized Cost						Fair Value
			(In thousands)
Due in one year or less			$	7,009					$	7,095					$	—					$	—
Due after one year through five years			28,441						29,608						—						—
Due after five years through ten years			71,319						74,089						68,210						68,014
Due after ten years			156,528						160,798						72,801						71,349
Total investment securities due at a single maturity date			263,297						271,590						141,011						139,363
Mortgage-backed securities (1)			620,535						622,745						242,382						236,968
Total			$	883,832					$	894,335					$	383,393					$	376,331

(1) Mortgage-backed securities, which have prepayment provisions, are not assigned to maturity categories due to fluctuations in their payment speed.

There were no holdings of investment 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, 2021 and December 31, 2020.

(b) Unrealized Losses on Investment Securities Available for Sale

The following tables show the gross unrealized losses and fair value of the Company’s investment securities available for sale for which an ACL on investment securities available for sale has not been recorded, aggregated by investment category

and length of time the individual securities have been in a continuous unrealized loss position at the dates indicated:

			December 31, 2021
			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			$	14,828					$	(176)					$	—					$	—					$	14,828					$	(176)
Municipal securities			29,774						(619)						9,351						(235)						39,125						(854)
Residential CMO and MBS			204,039						(2,470)						19,862						(123)						223,901						(2,593)
Commercial CMO and MBS			83,283						(1,161)						1,936						(38)						85,219						(1,199)
Other asset-backed securities			2,763						(9)						1,118						(7)						3,881						(16)
Total			$	334,687					$	(4,435)					$	32,267					$	(403)					$	366,954					$	(4,838)

			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)

(c) ACL on Investment Securities

The Company evaluated investment securities available for sale as of December 31, 2021 and December 31, 2020 and determined that any declines in fair value were attributable to changes in interest rates relative to where these investments fall within the yield curve and individual characteristics. Management monitors published credit ratings for adverse changes for all rated investment securities and none of these securities had a below investment grade credit rating as of both December 31, 2021 and December 31, 2020. In addition, the Company does not intend to sell these securities nor does the Company consider it more likely than not that it will be required to sell these securities before the recovery of the amortized cost basis, which may be upon maturity. Therefore, no ACL on investment securities available for sale was recorded as of December 31, 2021 and December 31, 2020.

The Company also evaluated investment securities held to maturity for current expected credit losses. There were no investment securities held to maturity classified as nonaccrual or past due as of December 31, 2021 and all were issued by the U.S. government and its agencies and either explicitly or implicitly guaranteed by the U.S. government, highly rated by major credit rating agencies and have a long history of no credit losses. Accordingly, the Company did not measure expected credit losses on investment securities held to maturity since the historical credit loss information adjusted for current conditions and reasonable and supportable forecasts results in an expectation that nonpayment of the amortized cost basis is zero. Therefore, no ACL on investment securities held to maturity was recorded as of December 31, 2021.

(d) Realized Gains and Losses

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, 2021, December 31, 2020 and December 31, 2019:

			Year ended December 31,
			2021						2020						2019
			(In thousands)
Gross realized gains			$	29					$	1,537					$	558
Gross realized losses			—						(19)						(228)
Net realized gains			$	29					$	1,518					$	330

(e) Pledged Securities

The following table summarizes the amortized cost and fair value of investment securities that are pledged as collateral for the following obligations at December 31, 2021 and December 31, 2020:

			December 31, 2021												December 31, 2020
			Amortized Cost						Fair Value						Amortized Cost						Fair Value
			(In thousands)
Washington and Oregon state public deposits			$	128,216					$	130,217					$	119,652					$	124,228
Federal Reserve Bank credit facility			61,057						59,674						—						—
Securities sold under agreement to repurchase			59,887						59,655						38,630						39,945
Other securities pledged			56,419						55,633						29,665						30,717
Total			$	305,579					$	305,179					$	187,947					$	194,890

(f) Accrued Interest Receivable

Accrued interest receivable excluded from the amortized cost on investment securities available for sale totaled $3.5 million and $3.6 million at December 31, 2021 and December 31, 2020, respectively. Accrued interest receivable excluded from the amortized cost on investment securities held to maturity totaled $1.1 million at December 31, 2021.

No amounts of accrued interest receivable on investment securities available for sale or held to maturity were reversed against interest income on investment securities available for sale during the years ended December 31, 2021, 2020, and 2019.

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- References

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- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 320
-URI http://asc.fasb.org/subtopic&trid=2209399

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 946
-SubTopic 320
-URI http://asc.fasb.org/subtopic&trid=2324412

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-URI http://asc.fasb.org/topic&trid=2196928

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 940
-SubTopic 320
-URI http://asc.fasb.org/subtopic&trid=2176304

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1403
-Paragraph (b)

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