Our investment securities portfolio consists of U.S. Treasury securities, 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, U.S. Corporations and one asset-backed security collateralized by student loan pools. 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)
December 31, 2022
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC, FNMA and GNMA	$	331,281	$	—	$	331,281	$	—	$	(50,147)	$	281,134
CMOs issued by FHLMC	235,971		—		235,971		59		(29,503)		206,527
CMOs issued by FNMA	111,904		—		111,904		—		(5,419)		106,485
CMOs issued by GNMA	52,356		—		52,356		11		(3,076)		49,291
SBA-backed securities	2,372		—		2,372		—		(133)		2,239

Debentures of government-sponsored agencies	145,823				145,823		—		(26,467)		119,356
Obligations of state and political subdivisions	62,500		—		62,500		—		(10,741)		51,759
Corporate bonds	30,000		—		30,000		—		(1,552)		28,448
Total held-to-maturity	$	972,207	$	—	$	972,207	$	70	$	(127,038)	$	845,239
December 31, 2021

Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC and FNMA	$	126,990	$	—	$	126,990	$	2,110	$	(712)	$	128,388
CMOs issued by FHLMC	106,851		—		106,851		668		(1,045)		106,474
CMOs issued by FNMA	4,866		—		4,866		128		—		4,994
SBA-backed securities	4,840		—		4,840		198		—		5,038
Debentures of government-sponsored agencies	51,472				51,472		—		(901)		50,571
Obligations of state and political subdivisions	47,203		—		47,203		296		(209)		47,290
Total held-to-maturity	$	342,222	$	—	$	342,222	$	3,400	$	(2,867)	$	342,755
1 Amortized cost and fair values exclude accrued interest receivable of $3.7 million and $1.1 million at December 31, 2022 and 2021, 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 collectively 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 and corporate bonds, 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)
December 31, 2022
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC, FNMA and GNMA	$	109,736	$	3	$	(12,133)	$	—	$	97,606
CMOs issued by FHLMC	347,437		—		(33,682)		—		313,755
CMOs issued by FNMA	36,172		—		(3,852)		—		32,320
CMOs issued by GNMA	35,120		—		(3,296)		—		31,824
SBA-backed securities	47,724		2		(3,371)		—		44,355
Debentures of government- sponsored agencies	149,114		—		(14,008)		—		135,106
U.S. Treasury securities	11,904		—		(1,635)		—		10,269

Obligations of state and political subdivisions	116,855		29		(14,761)		—		102,123
Corporate bonds	36,990		—		(3,714)		—		33,276
Asset-backed securities	1,553		—		(91)		—		1,462
Total available-for-sale	$	892,605	$	34	$	(90,543)	$	—	$	802,096
December 31, 2021
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC, FNMA and GNMA	$	316,090	$	1,224	$	(2,784)	$	—	$	314,530
CMOs issued by FHLMC	343,047		3,209		(4,829)		—		341,427
CMOs issued by FNMA	48,187		152		(611)		—		47,728
CMOs issued by GNMA	56,345		99		(553)		—		55,891
SBA-backed securities	32,640		993		(155)		—		33,478
Debentures of government- sponsored agencies	191,449		25		(2,947)		—		188,527

U.S. Treasury securities	11,886		—		(256)		—		11,630
Obligations of state and political subdivisions	129,009		5,372		(381)		—		134,000
Corporate bonds	39,001		—		(506)		—		38,495
Asset-backed securities	1,866		—		(4)		—		1,862
Total available-for-sale	$	1,169,520	$	11,074	$	(13,026)	$	—	$	1,167,568
1 Amortized cost and fair value exclude accrued interest receivable of $3.2 million and $3.7 million at December 31, 2022 and 2021, respectively, which is included in interest receivable and other assets in the consolidated statements of condition.

As part of our ongoing review of our investment securities portfolio, we reassessed the classification of certain securities issued by government-sponsored agencies. In March 2022, we transferred $357.5 million of these securities from available-for-sale to held-to-maturity at fair value. We intend and have the ability to hold these securities to maturity. The net unrealized pre-tax loss of $14.8 million that remained and the related accumulated other comprehensive loss are accreted to interest income over the remaining lives of the securities. Because these entries offset each other, there is no impact to net income.


	December 31, 2022								December 31, 2021
	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	$	450	$	446	$	1,254	$	1,239	$	101	$	103	$	10,785	$	10,841
After one but within five years	87,418		83,663		335,813		307,843		25,666		26,559		219,474		219,957
After five years through ten years	262,072		222,280		185,997		166,273		182,604		182,303		299,937		300,187
After ten years	622,267		538,850		369,541		326,741		133,851		133,790		639,324		636,583
Total	$	972,207	$	845,239	$	892,605	$	802,096	$	342,222	$	342,755	$	1,169,520	$	1,167,568


(in thousands)	December 31, 2022		December 31, 2021
Pledged to the State of California:
Secure public deposits in compliance with the Local Agency Security Program	$	231,307	$	213,861
Collateral for trust deposits	669		729
Collateral for Wealth Management and Trust Services checking account	564		614
Total investment securities pledged to the State of California	232,540		215,204
Bankruptcy trustee deposits pledged with Federal Reserve Bank	1,686		2,645
Total pledged investment securities	$	234,226	$	217,849


December 31, 2022	< 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, FNMA and GNMA	$	62,627	$	(5,960)	$	218,507	$	(44,187)	$	281,134	$	(50,147)


CMOs issued by FHLMC	78,144		(5,874)		113,796		(23,629)		191,940		(29,503)
CMOs issued by FNMA	106,485		(5,419)		—		—		106,485		(5,419)
CMOs issued by GNMA	27,570		(1,676)		10,331		(1,400)		37,901		(3,076)
SBA-backed securities	2,239		(133)		—		—		2,239		(133)
Debentures of government-sponsored agencies	38,645		(2,530)		80,711		(23,937)		119,356		(26,467)
Obligations of state and political subdivisions	15,155		(589)		36,603		(10,152)		51,758		(10,741)

Corporate bonds	28,448		(1,552)		—		—		28,448		(1,552)

Total held-to-maturity	$	359,313	$	(23,733)	$	459,948	$	(103,305)	$	819,261	$	(127,038)
Available-for-sale:
MBS pass-through securities issued by FHLMC, FNMA and GNMA	$	44,630	$	(4,501)	$	52,235	$	(7,632)	$	96,865	$	(12,133)
CMOs issued by FHLMC	169,760		(15,144)		143,995		(18,538)		313,755		(33,682)
CMOs issued by FNMA	4,790		(235)		27,529		(3,617)		32,319		(3,852)
CMOs issued by GNMA	8,214		(374)		23,612		(2,922)		31,826		(3,296)
SBA-backed securities	37,845		(3,228)		6,133		(143)		43,978		(3,371)
Debentures of government-sponsored agencies	19,054		(946)		116,052		(13,062)		135,106		(14,008)
U.S. Treasury securities	—		—		10,269		(1,635)		10,269		(1,635)
Obligations of state and political subdivisions	70,402		(9,459)		28,711		(5,302)		99,113		(14,761)
Corporate bonds	—		—		33,276		(3,714)		33,276		(3,714)
Asset-backed securities	—		—		1,462		(91)		1,462		(91)

Total available-for-sale	$	354,695	$	(33,887)	$	443,274	$	(56,656)	$	797,969	$	(90,543)
Total securities at a loss position	$	714,008	$	(57,620)	$	903,222	$	(159,961)	$	1,617,230	$	(217,581)


December 31, 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:
MBS pass-through securities issued by FHLMC and FNMA	$	76,619	$	(712)		$	—	$	—		$	76,619	$	(712)

CMOs issued by FHLMC	54,811		(1,045)			—		—			54,811		(1,045)
Obligations of state and political subdivisions	19,203		(209)			—		—			19,203		(209)
Debentures of government-sponsored agencies	50,571		(901)			—		—			50,571		(901)
Total held-to-maturity	$	201,204	$	(2,867)	—	$	—	$	—	—	$	201,204	$	(2,867)
Available-for-sale:
MBS pass-through securities issued by FHLMC and FNMA	$	263,474	$	(2,784)		$	—	$	—		$	263,474	$	(2,784)
SBA-backed securities	7,478		(112)			1,209		(43)			8,687		(155)
CMOs issued by FHLMC	226,175		(4,677)			4,415		(152)			230,590		(4,829)
CMOs issued by GNMA	44,790		(553)			—		—			44,790		(553)
CMOs issued by FNMA	37,348		(611)			—		—			37,348		(611)
Debentures of government- sponsored agencies	148,979		(2,527)			8,549		(420)			157,528		(2,947)
U.S. Treasury securities	11,629		(256)			—		—			11,629		(256)
Obligations of state and political subdivisions	17,552		(381)			—		—			17,552		(381)
Corporate bonds	38,495		(506)			—		—			38,495		(506)
Asset-backed securities	1,861		(4)			—		—			1,861		(4)
Total available-for-sale	$	797,781	$	(12,411)		$	14,173	$	(615)		$	811,954	$	(13,026)
Total	$	998,985	$	(15,278)		$	14,173	$	(615)		$	1,013,158	$	(15,893)

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 December 31, 2022, 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. No allowances for credit losses have 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 December 31, 2022.

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 $16.7 million of FHLB stock included in other assets on the consolidated statements of condition at both December 31, 2022 and 2021. 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 December 31, 2022 and 2021. On February 22, 2023, FHLB announced a cash dividend for the fourth quarter of 2022 at an annualized dividend rate of 7.00% to be distributed in mid-March 2023. 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 both December 31, 2022 and 2021. 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 1.5991 and 1.6181, as of December 31, 2022 and 2021, respectively, 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 $3.5 million and $3.7 million at December 31, 2022 and 2021, respectively. The conversion rate is subject to further adjustment upon the final settlement of the covered litigation against Visa Inc. and its member banks. As such, the fair value of these Class B shares can differ significantly from their converted values. For further information, refer to Note 12, Commitments and Contingencies.

We invest in low-income housing tax credit funds as a limited partner, which totaled $2.5 million and $3.0 million recorded in other assets as of December 31, 2022 and 2021, respectively. In 2022, we recognized $634 thousand of low income housing tax credits and other tax benefits, offset by $533 thousand of amortization expense of low-income housing tax credit investment, as a component of income tax expense. As of December 31, 2022, our unfunded commitments for these low-income housing tax credit funds totaled $386 thousand. We did not recognize any impairment losses on these low-income housing tax credit investments during 2022 or 2021, as the value of the future tax benefits exceeds the carrying value of the investments.