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Investment Securities - (Tables)

9 Months Ended

Sep. 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:

			September 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			$	69,797		$	73,884		$	4,087		$	—					$	80,451		$	81,325		$	1,018		$	(144)
SBA-backed securities			6,549			6,979			430			—						7,999			8,264			265			—
CMOs issued by FNMA			8,440			8,834			394			—						10,210			10,492			282			—
CMOs issued by FHLMC			29,657			31,331			1,674			—						31,477			32,157			685			(5)
CMOs issued by GNMA			1,230			1,235			5			—						3,763			3,816			53			—
Obligations of state and political subdivisions			1,677			1,720			43			—						3,513			3,588			75			—
Total held-to-maturity			117,350			123,983			6,633			—						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			56,679			59,482			2,803			—						98,502			100,071			1,617			(48)
SBA-backed securities			31,057			32,844			1,844			(57)						35,674			36,286			688			(76)
CMOs issued by FNMA			18,285			18,961			676			—						22,702			23,092			390			—
CMOs issued by FHLMC			144,600			153,255			8,656			(1)						139,398			143,226			3,892			(64)
CMOs issued by GNMA			9,064			9,491			427			—						11,719			11,755			42			(6)
Debentures of government- sponsored agencies			45,239			45,688			449			—						48,389			49,046			727			(70)
Obligations of state and political subdivisions			89,513			93,743			4,230			—						66,042			67,282			1,386			(146)
Corporate bonds			—			—			—			—						1,497			1,502			6			(1)
Total available-for-sale			394,437			413,464			19,085			(58)						423,923			432,260			8,748			(411)
Total investment securities			$	511,787		$	537,447		$	25,718		$	(58)					$	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:

			September 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			$	69,797		$	73,884		$	4,087		$	—					$	80,451		$	81,325		$	1,018		$	(144)
SBA-backed securities			6,549			6,979			430			—						7,999			8,264			265			—
CMOs issued by FNMA			8,440			8,834			394			—						10,210			10,492			282			—
CMOs issued by FHLMC			29,657			31,331			1,674			—						31,477			32,157			685			(5)
CMOs issued by GNMA			1,230			1,235			5			—						3,763			3,816			53			—
Obligations of state and political subdivisions			1,677			1,720			43			—						3,513			3,588			75			—
Total held-to-maturity			117,350			123,983			6,633			—						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			56,679			59,482			2,803			—						98,502			100,071			1,617			(48)
SBA-backed securities			31,057			32,844			1,844			(57)						35,674			36,286			688			(76)
CMOs issued by FNMA			18,285			18,961			676			—						22,702			23,092			390			—
CMOs issued by FHLMC			144,600			153,255			8,656			(1)						139,398			143,226			3,892			(64)
CMOs issued by GNMA			9,064			9,491			427			—						11,719			11,755			42			(6)
Debentures of government- sponsored agencies			45,239			45,688			449			—						48,389			49,046			727			(70)
Obligations of state and political subdivisions			89,513			93,743			4,230			—						66,042			67,282			1,386			(146)
Corporate bonds			—			—			—			—						1,497			1,502			6			(1)
Total available-for-sale			394,437			413,464			19,085			(58)						423,923			432,260			8,748			(411)
Total investment securities			$	511,787		$	537,447		$	25,718		$	(58)					$	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 September 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.

			September 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			$	247		$	252					$	14,235		$	14,452					$	1,807		$	1,811					$	6,699		$	6,706
After one but within five years			8,974			9,539						60,958			64,559						2,256			2,296						48,706			49,619
After five years through ten years			52,373			56,139						164,815			174,439						56,221			57,544						208,806			214,277
After ten years			55,756			58,053						154,429			160,014						77,129			77,991						159,712			161,658
Total			$	117,350		$	123,983					$	394,437		$	413,464					$	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									Nine months ended
(in thousands)			September 30, 2020			September 30, 2019						September 30, 2020			September 30, 2019
Available-for-sale:
Sales proceeds			$	—		$	—					$	33,756		$	66,081
Gross realized gains			—			—						916			214
Gross realized losses			—			—						(1)			(159)

Schedule of financial instruments owned and pledged as collateral

Pledged investment securities are shown in the following table:

(in thousands)			September 30, 2020			December 31, 2019
Pledged to the State of California:
Secure public deposits in compliance with the Local Agency Security Program			$	102,396		$	126,598
Collateral for trust deposits			752			742
Total investment securities pledged to the State of California			103,148			127,340
Collateral for Wealth Management and Trust Services checking account			629			622
Total pledged investment securities			$	103,777		$	127,962

Schedule of unrealized loss on investments

There were 8 and 40 securities in unrealized loss positions at September 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:

September 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			$	—		$	—					$	1,900		$	(57)					$	1,900		$	(57)
CMOs issued by FHLMC			2,014			(1)						—			—						2,014			(1)
Total available-for-sale			2,014			(1)						1,900			(57)						3,914			(58)
Total temporarily impaired securities			$	2,014		$	(1)					$	1,900		$	(57)					$	3,914		$	(58)

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).

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-Publisher FASB
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