Our investment securities portfolio consists of obligations of state and political subdivisions, U.S. Corporations, 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.


Held-to-maturity:	Amortized Cost 1		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized				Fair Value
(in thousands)							Gains		(Losses)
June 30, 2021
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC and FNMA	$	74,115	$	—	$	74,115	$	3,247	$	—	$	77,362
CMOs issued by FHLMC	38,641		—		38,641		1,142		(38)		39,745
CMOs issued by FNMA	6,274		—		6,274		265		—		6,539

SBA-backed securities	5,697		—		5,697		361		—		6,058
Debentures of government-sponsored agencies	43,731		—		43,731		115		—		43,846
Obligations of state and political subdivisions	580		—		580		8		—		588
Total held-to-maturity	$	169,038	$	—	$	169,038	$	5,138	$	(38)	$	174,138
December 31, 2020
Corporate bonds	$	—	$	—	$	—	$	—	$	—	$	—
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC and FNMA	$	65,579	$	—	$	65,579	$	3,924	$	—	$	69,503
CMOs issued by FHLMC	27,201		—		27,201		1,441		—		28,642
CMOs issued by FNMA	8,042		—		8,042		363		—		8,405

SBA-backed securities	6,547		—		6,547		400		—		6,947

Obligations of state and political subdivisions	1,667		—		1,667		21		—		1,688
Total held-to-maturity	$	109,036	$	—	$	109,036	$	6,149	$	—	$	115,185
1 Amortized cost and fair values exclude accrued interest receivable of $550 thousand and $366 thousand at June 30, 2021 and December 31, 2020, respectively, which is included in interest receivable and other assets in the consolidated statements of condition.

Management measures expected credit losses on held-to-maturity securities on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. With regard to MBSs and CMOs issued or guaranteed by the GSEs, and SBA-backed securities, we expect to receive all the contractual principal and interest on these securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government. Accordingly, no allowance for credit losses has been recorded for these securities. With regard to securities issued by states and political subdivisions, management considers (i) issuer and/or guarantor credit

ratings, (ii) historical probability of default and loss given default rates for given bond ratings and remaining maturity,(iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) internal credit review of the financial information, and (v) whether or not such securities have credit enhancements such as guarantees, contain a defeasance clause, or are pre-refunded by the issuers. Based on the comprehensive analysis, no credit losses are expected.


Available-for-sale:	Amortized Cost 1		Gross Unrealized				Allowance for Credit Losses		Fair Value
(in thousands)			Gains		(Losses)
June 30, 2021
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC and FNMA	$	57,653	$	1,867	$	—	$	—	$	59,520
CMOs issued by FHLMC	160,949		5,573		(436)		—		166,086
CMOs issued by FNMA	36,636		428		—		—		37,064
CMOs issued by GNMA	21,855		258		—		—		22,113
SBA-backed securities	27,938		1,568		(46)		—		29,460
Debentures of government- sponsored agencies	76,321		128		(1,738)		—		74,711

Obligations of state and political subdivisions	117,595		5,694		(65)		—		123,224
Corporate bonds	5,987		—		(202)		—		5,785
Total available-for-sale	$	504,934	$	15,516	$	(2,487)	$	—	$	517,963
December 31, 2020
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC and FNMA	$	50,686	$	2,530	$	—	$	—	$	53,216
CMOs issued by FHLMC	143,267		7,925		(1)		—		151,191
CMOs issued by FNMA	16,450		580		—		—		17,030
CMOs issued by GNMA	6,863		351		—		—		7,214
SBA-backed securities	30,941		1,976		(55)		—		32,862
Debentures of government- sponsored agencies	19,944		266		(24)		—		20,186

Obligations of state and political subdivisions	104,887		5,765		—		—		110,652

Total available-for-sale	$	373,038	$	19,393	$	(80)	$	—	$	392,351
1 Amortized cost and fair value exclude accrued interest receivable of $2.4 million and $1.9 million June 30, 2021 and December 31, 2020, which is included in interest receivable and other assets in the consolidated statements of condition.

The amortized cost and fair value of investment debt securities by contractual maturity at June 30, 2021 and December 31, 2020 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, 2021								December 31, 2020
	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	$	245	$	246	$	14,263	$	14,403	$	246	$	250	$	11,530	$	11,687
After one but within five years	20,203		21,184		53,194		55,835		7,550		7,961		59,028		62,397
After five years through ten years	58,465		60,963		183,706		189,492		52,113		55,872		144,908		154,089
After ten years	90,125		91,745		253,771		258,233		49,127		51,102		157,572		164,178
Total	$	169,038	$	174,138	$	504,934	$	517,963	$	109,036	$	115,185	$	373,038	$	392,351


(in thousands)	June 30, 2021		December 31, 2020
Pledged to the State of California:
Secure public deposits in compliance with the Local Agency Security Program	$	145,128	$	131,051
Collateral for trust deposits	742		751
Total investment securities pledged to the State of California	145,870		131,802
Collateral for Wealth Management and Trust Services checking account	624		629
Total pledged investment securities	$	146,494	$	132,431


June 30, 2021	< 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:



CMOs issued by FHLMC	$	4,372	$	(38)	$	—	$	—	$	4,372	$	(38)


Total held-to-maturity	4,372		(38)		—		—		4,372		(38)
Available-for-sale:
MBS pass-through securities issued by FHLMC and FNMA	—		—		—		—		—		—
SBA-backed securities	—		—		1,417		(46)		1,417		(46)
CMOs issued by FNMA	—		—		—		—		—		—
CMOs issued by FHLMC	33,740		(436)		—		—		33,740		(436)

Debentures of government- sponsored agencies	63,594		(1,738)		—		—		63,594		(1,738)

Obligations of state and political subdivisions	2,550		(65)		—		—		2,550		(65)
Corporate bonds	5,785		(202)		—		—		5,785		(202)
Total available-for-sale	105,669		(2,441)		1,417		(46)		107,086		(2,487)
Total temporarily impaired securities	$	110,041	$	(2,479)	$	1,417	$	(46)	$	111,458	$	(2,525)


December 31, 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	$	—	$	—	$	1,790	$	(55)	$	1,790	$	(55)

CMOs issued by FHLMC	5,975		(1)		—		—		5,975		(1)

Debentures of government- sponsored agencies	3,943		(24)		—		—		3,943		(24)



Total available-for-sale	9,918		(25)		1,790		(55)		11,708		(80)
Total temporarily impaired securities	$	9,918	$	(25)	$	1,790	$	(55)	$	11,708	$	(80)

Securities issued by government-sponsored agencies, such as FNMA and FHLMC, usually have implicit credit support by the U.S. federal government. However, since 2008, FNMA and FHLMC have been under government conservatorship and, therefore, contractual cash flows for these investments carry explicit guarantees by the U.S. federal government. Securities issued by the SBA and GNMA have explicit credit guarantees by the U.S. federal government, which protects us from credit losses on the contractual cash flows of the securities.

At June 30, 2021, management determined that it did not intend to sell any investment securities with unrealized losses, and it is more likely than not that we will not be required to sell securities with unrealized losses before recovery of their amortized cost. Therefore, no allowances for credit losses has been recognized on available for sale securities in an unrealized loss position as management does not believe any of the securities are impaired due to reasons of credit quality at June 30, 2021.

As a member of the FHLB, we are required to maintain a minimum investment in FHLB capital stock determined by the Board of Directors of the FHLB. The minimum investment requirements can increase in the event we increase our total asset size or borrowings with the FHLB. Shares cannot be purchased or sold except between the FHLB and its members at the $100 per share par value. We held $11.9 million of FHLB stock included in other assets on the consolidated statements of condition at both June 30, 2021 and December 31, 2020. The carrying amounts of these investments are reasonable estimates of fair value because the securities are restricted to member banks and they do not have a readily determinable market value. Based on our analysis of FHLB's financial condition and certain qualitative factors, we determined that the FHLB stock was not impaired at June 30, 2021 and December 31, 2020. On July 29, 2021, FHLB announced a cash dividend for the second quarter of 2021 at an annualized dividend rate of 6.00% to be distributed in mid-August 2021. Cash dividends paid on FHLB capital stock are recorded as non-interest income.

As a member bank of Visa U.S.A., we held 10,439 shares of Visa Inc. Class B common stock at June 30, 2021 and December 31, 2020. These shares have a carrying value of zero and are restricted from resale to non-member banks of Visa U.S.A. until their conversion into Class A (voting) shares upon the termination of Visa Inc.'s Covered Litigation escrow account. Because of the restriction and the uncertainty on the conversion rate to Class A shares, these shares lack a readily determinable fair value. When converting this Class B common stock to Class A common stock based on the estimated conversion rate of 1.6228 both at June 30, 2021 and December 31, 2020, and the closing stock price of Class A shares at those respective dates, the converted value of our shares of Class B common stock would have been $4.0 million and $3.7 million at June 30, 2021 and December 31, 2020, respectively. The conversion rate is subject to further adjustment upon the final settlement of the covered litigation

We invest in low-income housing tax credit funds as a limited partner, which totaled $3.3 million and $3.5 million recorded in other assets as of June 30, 2021 and December 31, 2020, respectively. In the first six months of 2021, we recognized $323 thousand of low-income housing tax credits and other tax benefits, offset by $271 thousand of amortization expense of low-income housing tax credit investment, as a component of income tax expense. As of June 30, 2021, our unfunded commitments for these low-income housing tax credit funds totaled $474 thousand. We did not recognize any impairment losses on these low-income housing tax credit investments during the first six months of 2021 or 2020, as the value of the future tax benefits exceeds the carrying value of the investments.