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Investment Securities - (Tables)

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Summary of Held-to-Maturity Investments

Our investment securities portfolio consists of obligations of state and political subdivisions, U.S. federal government agencies such as Government National Mortgage Association ("GNMA") and Small Business Administration ("SBA"), U.S. government-sponsored enterprises ("GSEs"), such as Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Farm Credit Banks Funding Corporation and FHLB. We also invest in residential and commercial mortgage-backed securities (“MBS”/"CMBS") and collateralized mortgage obligations (“CMOs”) issued or guaranteed by the GSEs, as reflected in the following table:

			June 30, 2020																								December 31, 2019
			Amortized			Fair			Gross Unrealized												Amortized			Fair			Gross Unrealized
(in thousands)			Cost			Value			Gains			(Losses)						Cost			Value			Gains			(Losses)
Held-to-maturity:
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC and FNMA			$	74,688		$	79,006		$	4,318		$	—					$	80,451		$	81,325		$	1,018		$	(144)
SBA-backed securities			7,029			7,473			444			—						7,999			8,264			265			—
CMOs issued by FNMA			9,011			9,524			513			—						10,210			10,492			282			—
CMOs issued by FHLMC			30,444			32,140			1,696			—						31,477			32,157			685			(5)
CMOs issued by GNMA			2,687			2,714			27			—						3,763			3,816			53			—
Obligations of state and political subdivisions			1,922			1,979			57			—						3,513			3,588			75			—
Total held-to-maturity			125,781			132,836			7,055			—						137,413			139,642			2,378			(149)
Available-for-sale:
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC and FNMA			62,337			65,587			3,250			—						98,502			100,071			1,617			(48)
SBA-backed securities			32,517			33,993			1,536			(60)						35,674			36,286			688			(76)
CMOs issued by FNMA			20,018			20,849			831			—						22,702			23,092			390			—
CMOs issued by FHLMC			150,360			158,698			8,339			(1)						139,398			143,226			3,892			(64)
CMOs issued by GNMA			10,089			10,575			486			—						11,719			11,755			42			(6)
Debentures of government- sponsored agencies			41,355			42,018			663			—						48,389			49,046			727			(70)
Obligations of state and political subdivisions			94,371			98,055			3,684			—						66,042			67,282			1,386			(146)
Corporate bonds			—			—			—			—						1,497			1,502			6			(1)
Total available-for-sale			411,047			429,775			18,789			(61)						423,923			432,260			8,748			(411)
Total investment securities			$	536,828		$	562,611		$	25,844		$	(61)					$	561,336		$	571,902		$	11,126		$	(560)

Summary of Available-for-Sale Investments

Our investment securities portfolio consists of obligations of state and political subdivisions, U.S. federal government agencies such as Government National Mortgage Association ("GNMA") and Small Business Administration ("SBA"), U.S. government-sponsored enterprises ("GSEs"), such as Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Farm Credit Banks Funding Corporation and FHLB. We also invest in residential and commercial mortgage-backed securities (“MBS”/"CMBS") and collateralized mortgage obligations (“CMOs”) issued or guaranteed by the GSEs, as reflected in the following table:

			June 30, 2020																								December 31, 2019
			Amortized			Fair			Gross Unrealized												Amortized			Fair			Gross Unrealized
(in thousands)			Cost			Value			Gains			(Losses)						Cost			Value			Gains			(Losses)
Held-to-maturity:
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC and FNMA			$	74,688		$	79,006		$	4,318		$	—					$	80,451		$	81,325		$	1,018		$	(144)
SBA-backed securities			7,029			7,473			444			—						7,999			8,264			265			—
CMOs issued by FNMA			9,011			9,524			513			—						10,210			10,492			282			—
CMOs issued by FHLMC			30,444			32,140			1,696			—						31,477			32,157			685			(5)
CMOs issued by GNMA			2,687			2,714			27			—						3,763			3,816			53			—
Obligations of state and political subdivisions			1,922			1,979			57			—						3,513			3,588			75			—
Total held-to-maturity			125,781			132,836			7,055			—						137,413			139,642			2,378			(149)
Available-for-sale:
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC and FNMA			62,337			65,587			3,250			—						98,502			100,071			1,617			(48)
SBA-backed securities			32,517			33,993			1,536			(60)						35,674			36,286			688			(76)
CMOs issued by FNMA			20,018			20,849			831			—						22,702			23,092			390			—
CMOs issued by FHLMC			150,360			158,698			8,339			(1)						139,398			143,226			3,892			(64)
CMOs issued by GNMA			10,089			10,575			486			—						11,719			11,755			42			(6)
Debentures of government- sponsored agencies			41,355			42,018			663			—						48,389			49,046			727			(70)
Obligations of state and political subdivisions			94,371			98,055			3,684			—						66,042			67,282			1,386			(146)
Corporate bonds			—			—			—			—						1,497			1,502			6			(1)
Total available-for-sale			411,047			429,775			18,789			(61)						423,923			432,260			8,748			(411)
Total investment securities			$	536,828		$	562,611		$	25,844		$	(61)					$	561,336		$	571,902		$	11,126		$	(560)

Investments Classified by Contractual Maturity Date

The amortized cost and fair value of investment debt securities by contractual maturity at June 30, 2020 and December 31, 2019 are shown below. Expected maturities may differ from contractual maturities if the issuers of the securities have the right to call or prepay obligations with or without call or prepayment penalties.

			June 30, 2020																														December 31, 2019
			Held-to-Maturity												Available-for-Sale												Held-to-Maturity												Available-for-Sale
(in thousands)			Amortized Cost			Fair Value						Amortized Cost			Fair Value						Amortized Cost			Fair Value						Amortized Cost			Fair Value
Within one year			$	1,333		$	1,368					$	18,446		$	18,575					$	1,807		$	1,811					$	6,699		$	6,706
After one but within five years			2,230			2,319						55,125			57,705						2,256			2,296						48,706			49,619
After five years through ten years			53,616			57,101						173,876			183,624						56,221			57,544						208,806			214,277
After ten years			68,602			72,048						163,600			169,871						77,129			77,991						159,712			161,658
Total			$	125,781		$	132,836					$	411,047		$	429,775					$	137,413		$	139,642					$	423,923		$	432,260

Sale of Investment Securities and Gross Gains and Losses

Sales of investment securities and gross gains and losses are shown in the following table:

			Three months ended												Six months ended
(in thousands)			June 30, 2020			June 30, 2019						June 30, 2020			June 30, 2019
Available-for-sale:
Sales proceeds			$	6,314		$	61,852					$	33,756		$	66,081
Gross realized gains			116			211						916			214
Gross realized losses			(1)			(150)						(1)			(159)

Schedule of Financial Instruments Owned and Pledged as Collateral

Pledged investment securities are shown in the following table:

(in thousands)			June 30, 2020			December 31, 2019
Pledged to the State of California:
Secure public deposits in compliance with the Local Agency Security Program			$	122,042		$	126,598
Collateral for trust deposits			750			742
Total investment securities pledged to the State of California			122,792			127,340
Collateral for Wealth Management and Trust Services checking account			629			622
Total pledged investment securities			$	123,421		$	127,962

Schedule of Unrealized Loss on Investments

There were 7 and 40 securities in unrealized loss positions at June 30, 2020 and December 31, 2019, respectively. Those securities are summarized and classified according to the duration of the loss period in the tables below:

June 30, 2020			< 12 continuous months												≥ 12 continuous months												Total securities in a loss position
(in thousands)			Fair value			Unrealized loss						Fair value			Unrealized loss						Fair value			Unrealized loss
Available-for-sale:
SBA-backed securities			$	—		$	—					$	2,016		$	(60)					$	2,016		$	(60)
CMOs issued by FHLMC			2,740			(1)						—			—						2,740			(1)
Total available-for-sale			2,740			(1)						2,016			(60)						4,756			(61)
Total temporarily impaired securities			$	2,740		$	(1)					$	2,016		$	(60)					$	4,756		$	(61)

December 31, 2019			< 12 continuous months												≥ 12 continuous months												Total securities in a loss position
(in thousands)			Fair value			Unrealized loss						Fair value			Unrealized loss						Fair value			Unrealized loss
Held-to-maturity:
MBS pass-through securities issued by FHLMC and FNMA			$	14,203		$	(60)					$	6,073		$	(84)					$	20,276		$	(144)
CMOs issued by FHLMC			—			—						1,725			(5)						1,725			(5)
Total held-to-maturity			14,203			(60)						7,798			(89)						22,001			(149)
Available-for-sale:
MBS pass-through securities issued by FHLMC and FNMA			4,367			(34)						4,464			(14)						8,831			(48)
SBA-backed securities			9,227			(14)						2,448			(62)						11,675			(76)
CMOs issued by FHLMC			14,918			(58)						2,981			(6)						17,899			(64)
CMOs issued by GNMA			7,139			(6)						—			—						7,139			(6)
Debentures of government- sponsored agencies			25,228			(70)						—			—						25,228			(70)
Obligations of state and political subdivisions			20,579			(145)						659			(1)						21,238			(146)
Corporate Bonds			500			(1)						—			—						500			(1)
Total available-for-sale			81,958			(328)						10,552			(83)						92,510			(411)
Total temporarily impaired securities			$	96,161		$	(388)					$	18,350		$	(172)					$	114,511		$	(560)

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- Definition

Tabular disclosure of investment in debt security measured at fair value with change in fair value recognized in other comprehensive income (available-for-sale).

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
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-Topic 320
-SubTopic 10
-Section 50
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