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Investments | 6 Months Ended
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Jun. 30, 2016
Investments, Debt and Equity Securities [Abstract] |
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure | Note 10 – Investments Investment Securities Although the Company currently has the intent and the ability to hold the securities in its investment portfolio to maturity, the securities are all marketable and are classified as “available for sale” to allow maximum flexibility with regard to interest rate risk and liquidity management. Pursuant to FASB’s guidance on accounting for debt and equity securities, available for sale securities are carried on the Company’s financial statements at their estimated fair market values, with monthly tax-effected “mark-to-market” adjustments made vis-à-vis accumulated other comprehensive income in shareholders’ equity. Amortized Cost And Estimated Fair Value (dollars in thousands, unaudited): The amortized cost and estimated fair value of investment securities available-for-sale are as follows
|  | June 30, 2016 |
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value |
US Government agencies |  | $ | 24,466 |  | $ | 409 |  | $ | (3) |  | $ | 24,872 |
Mortgage-backed securities |  |  | 391,345 |  |  | 3,951 |  |  | (682) |  |  | 394,614 |
State and poltical subdivisions |  |  | 103,433 |  |  | 4,503 |  |  | (10) |  |  | 107,926 |
Other securities |  |  | 500 |  |  | 627 |  |  | - |  |  | 1,127 |
Total investment securities |  | $ | 519,744 |  | $ | 9,490 |  | $ | (695) |  | $ | 528,539 |
|  | December 31, 2015 |
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value |
US Government agencies |  | $ | 28,801 |  | $ | 303 |  | $ | (62) |  | $ | 29,042 |
Mortgage-backed securities |  |  | 374,683 |  |  | 2,440 |  |  | (2,062) |  |  | 375,061 |
State and political subdivisons |  |  | 99,093 |  |  | 3,146 |  |  | (56) |  |  | 102,183 |
Other securities |  |  | 575 |  |  | 721 |  |  | - |  |  | 1,296 |
Total investment securities |  | $ | 503,152 |  | $ | 6,610 |  | $ | (2,180) |  | $ | 507,582 |
At June 30, 2016 and December 31, 2015, the Company had 90 securities and 175 securities, respectively, with unrealized losses. Management has evaluated those securities as of the respective dates, and does not believe that any of the unrealized losses are other than temporary. Gross unrealized losses on our investment securities as of the indicated dates are disclosed in the table below, categorized by investment type and by the duration of time that loss positions on individual securities have continuously existed (over or under twelve months).
Investment Portfolio - Unrealized Losses (dollars in thousands, unaudited)
|  | June 30, 2016 |
|  | Less than twelve months |  | Twelve months or more |
|  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses |  | Fair Value |
US Government agencies |  | $ | (3) |  | $ | 3,301 |  | $ | - |  | $ | - |
Mortgage-backed securities |  |  | (323) |  |  | 67,579 |  |  | (359) |  |  | 51,187 |
State and political subdivisions |  |  | (10) |  |  | 1,583 |  |  | - |  |  | - |
Total |  | $ | (336) |  | $ | 72,463 |  | $ | (359) |  | $ | 51,187 |
|  | December 31, 2015 |
|  | Less than twelve months |  | Twelve months or more |
|  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses |  | Fair Value |
US Government agencies |  | $ | (62) |  | $ | 10,329 |  | $ | - |  | $ | - |
Mortgage-backed securities |  |  | (1,608) |  |  | 187,734 |  |  | (454) |  |  | 35,511 |
State and political subdivisions |  |  | (17) |  |  | 3,409 |  |  | (39) |  |  | 3,847 |
Total |  | $ | (1,687) |  | $ | 201,472 |  | $ | (493) |  | $ | 39,358 |
The table below summarizes the Company’s gross realized gains and losses as well as gross proceeds from the sales of securities, for the periods indicated:
Investment Portfolio - Realized Gains/(Losses) (dollars in thousands, unaudited)
|  | Three months ended June 30, |  | Six months ended June 30, |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |
Proceeds from sales, calls and maturities of securities available for sale |  | $ | 2,790 |  | $ | 2,963 |  | $ | 5,395 |  | $ | 22,828 |
Gross gains on sales, calls and maturities of securities available for sale |  | $ | 146 |  | $ | 307 |  | $ | 160 |  | $ | 522 |
Gross losses on sales, calls and maturities of securities available for sale |  |  | - |  |  | - |  |  | (38) |  |  | (199) |
Net gains on sale of securities available for sale |  | $ | 146 |  | $ | 307 |  | $ | 122 |  | $ | 323 |
The amortized cost and estimated fair value of investment securities available-for-sale at June 30, 2016 and December 31, 2015 are shown below, grouped by the remaining time to contractual maturity dates. The expected life of investment securities may not be consistent with contractual maturity dates, since the issuers of the securities could have the right to call or prepay obligations with or without penalties. Estimated Fair Value of Contractual Maturities (dollars in thousands, unaudited)
|  | June 30, 2016 |
|  | Amortized Cost |  | Fair Value |
Maturing within one year |  | $ | 6,164 |  | $ | 6,370 |
Maturing after one year through five years |  |  | 250,424 |  |  | 253,919 |
Maturing after five years through ten years |  |  | 47,068 |  |  | 48,674 |
Maturing after ten years |  |  | 47,348 |  |  | 49,287 |
Investment securities not due at a single maturity date: |  |  |  |  |  |  |
U.S Government agencies collateralized by mortgage obligations |  |  | 168,240 |  |  | 169,162 |
Other securities |  |  | 500 |  |  | 1,127 |
|  | $ | 519,744 |  | $ | 528,539 |
|  | December 31, 2015 |
|  | Amortized Cost |  | Fair Value |
Maturing within one year |  | $ | 3,657 |  | $ | 3,706 |
Maturing after one year through five years |  |  | 242,719 |  |  | 244,733 |
Maturing after five years through ten years |  |  | 50,144 |  |  | 51,308 |
Maturing after ten years |  |  | 50,413 |  |  | 51,671 |
Investment securities not due at a single maturity date: |  |  |  |  |  |  |
U.S Government agencies collateralized by mortgage obligations |  |  | 155,644 |  |  | 154,868 |
Other securities |  |  | 575 |  |  | 1,296 |
|  | $ | 503,152 |  | $ | 507,582 |
At June 30, 2016, the Company’s investment portfolio included securities issued by 292 different government municipalities and agencies located within 27 states with a fair value of $107.9 million. The largest exposure to any single municipality or agency was a $934,000 (fair value) bond issued by the Thurston School District in Washington, to be repaid by property taxes. The Company’s investments in bonds issued by states, municipalities and political subdivisions are evaluated in accordance with Supervision and Regulation Letter 12-15 issued by the Board of Governors of the Federal Reserve System, “Investing in Securities without Reliance on Nationally Recognized Statistical Rating Organization Ratings,” and other regulatory guidance. Credit ratings are considered in our analysis only as a guide to the historical default rate associated with similarly-rated bonds. There have been no significant differences in our internal analyses compared with the ratings assigned by the third party credit rating agencies. The following table summarizes the amortized cost and fair values of general obligation and revenue bonds in the Company’s investment securities portfolio at the indicated dates, identifying the state in which the issuing municipality or agency operates for our largest geographic concentrations:
Revenue and General Obligation Bonds by Location (dollars in thousands, unaudited)
|  | June 30, 2016 |  | December 31, 2015 |
|  | Amortized |  | Fair Market |  | Amortized |  | Fair Market |
General obligation bonds |  | Cost |  | Value |  | Cost |  | Value |
State of issuance |  |  |  |  |  |  |  |  |  |  |  |  |
California |  | $ | 23,250 |  | $ | 24,690 |  | $ | 20,473 |  | $ | 21,642 |
Texas |  |  | 17,656 |  |  | 18,326 |  |  | 16,575 |  |  | 16,954 |
Illinois |  |  | 10,234 |  |  | 10,545 |  |  | 9,997 |  |  | 10,191 |
Ohio |  |  | 9,059 |  |  | 9,305 |  |  | 7,610 |  |  | 7,748 |
Washington |  |  | 5,873 |  |  | 6,090 |  |  | 5,905 |  |  | 6,081 |
Arizona |  |  | 2,023 |  |  | 2,103 |  |  | 2,039 |  |  | 2,108 |
Utah |  |  | 951 |  |  | 1,013 |  |  | 953 |  |  | 990 |
Other states |  |  | 18,518 |  |  | 19,298 |  |  | 20,334 |  |  | 20,848 |
Total General Obligation Bonds |  |  | 87,564 |  |  | 91,370 |  |  | 83,886 |  |  | 86,562 |
Revenue bonds |  |  |  |  |  |  |  |  |  |  |  |  |
State of issuance |  |  |  |  |  |  |  |  |  |  |  |  |
Texas |  |  | 4,969 |  |  | 5,153 |  |  | 3,732 |  |  | 3,863 |
Utah |  |  | 4,426 |  |  | 4,631 |  |  | 4,434 |  |  | 4,519 |
Washington |  |  | 1,306 |  |  | 1,387 |  |  | 1,791 |  |  | 1,827 |
California |  |  | 1,002 |  |  | 1,030 |  |  | 1,002 |  |  | 1,028 |
Ohio |  |  | 318 |  |  | 319 |  |  | 318 |  |  | 319 |
Other states |  |  | 3,848 |  |  | 4,036 |  |  | 3,930 |  |  | 4,065 |
Total Revenue Bonds |  |  | 15,869 |  |  | 16,556 |  |  | 15,207 |  |  | 15,621 |
Total Obligations of States and Political Subdivisions |  | $ | 103,433 |  | $ | 107,926 |  | $ | 99,093 |  | $ | 102,183 |
The revenue bonds in the Company’s investment securities portfolios were issued by government municipalities and agencies to fund public services such as utilities (water, sewer, and power), educational facilities, and general public and economic improvements. The primary sources of revenue for these bonds are delineated in the table below, which shows the amortized cost and fair market values for the largest revenue concentrations as of the indicated dates. Revenue Bonds by Type (dollars in thousands, unaudited)
|  | June 30, 2016 |  | December 31, 2015 |
|  | Amortized |  | Fair Market |  | Amortized |  | Fair Market |
Revenue bonds |  | Cost |  | Value |  | Cost |  | Value |
Revenue source: |  |  |  |  |  |  |  |  |  |  |  |  |
Water |  | $ | 4,402 |  | $ | 4,516 |  | $ | 3,942 |  | $ | 4,052 |
College & University |  |  | 2,706 |  |  | 2,876 |  |  | 2,975 |  |  | 3,103 |
Sales Tax |  |  | 2,256 |  |  | 2,373 |  |  | 2,630 |  |  | 2,663 |
Lease |  |  | 2,299 |  |  | 2,403 |  |  | 2,040 |  |  | 2,100 |
Port, Airport & Marina |  |  | 1,302 |  |  | 1,374 |  |  | - |  |  | - |
Electric & Power |  |  | 729 |  |  | 753 |  |  | 679 |  |  | 691 |
Other sources |  |  | 2,175 |  |  | 2,261 |  |  | 2,941 |  |  | 3,012 |
Total Revenue Bonds |  | $ | 15,869 |  | $ | 16,556 |  | $ | 15,207 |  | $ | 15,621 |
Low-Income Housing Tax Credit (“LIHTC”) Fund Investments The Company has the ability to invest in limited partnerships which own housing projects that qualify for federal and/or California state tax credits, by mandating a specified percentage of low-income tenants for each project. The tax credits flow through to investors, augmenting any returns that might be derived from an increase in property values. Because rent levels are lower than standard market rents and the projects are generally highly leveraged, each project also typically generates tax-deductible operating losses that are allocated to the limited partners. The Company invested in seven LIHTC fund limited partnerships from 2001 through 2007, and in the second quarter of 2016 we committed $3 million to another such fund. Our investments to date have all been in California-focused funds which help the Company meet its obligations under the Community Reinvestment Act. We utilize the equity method of accounting for our LIHTC fund investments. Under the equity method, our balance sheet initially reflects an asset that represents the total cash expected to be invested over the life of the partnership. Any commitments or contingent commitments for future investment are reflected as a liability. The income statement treatment under the equity method reflects tax credits received by the Company “below the line” within the income tax provision, while fund operating results are included “above the line” in non-interest income. As noted above, operating results are typically losses that are netted against non-interest income. As of June 30, 2016 our total LIHTC investment balance was $7.4 million, which includes $2.4 million in remaining commitments for additional capital contributions to the limited partnerships. There were $343,000 in tax credits derived from our LIHTC investments which were recognized during the six months ended June 30, 2016, and a pass-through operating loss of $519,000 associated with those investments was included in pre-tax income for the same time period. Our LIHTC investments are evaluated annually for potential impairment, and we have concluded that the carrying value of the investments is stated fairly and is not impaired.

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -Glossary Debt Security -URI http://asc.fasb.org/extlink&oid=6509901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27290-111563 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6379141&loc=d3e15032-111544 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27232-111563 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -Glossary Equity Security -URI http://asc.fasb.org/extlink&oid=6511694 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62557-112803 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27161-111563 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27357-111563 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27405-111563 + Details
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