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 and U.S. Corporations. 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)
September 30, 2023
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC, FNMA and GNMA	$	311,595	$	—	$	311,595	$	—	$	(61,870)	$	249,725
CMOs issued by FHLMC	228,194		—		228,194		71		(33,448)		194,817
CMOs issued by FNMA	104,031		—		104,031		—		(9,125)		94,906
CMOs issued by GNMA	51,268		—		51,268		155		(4,816)		46,607
SBA-backed securities	1,853		—		1,853		—		(140)		1,713
Debentures of government-sponsored agencies	146,050		—		146,050		—		(28,893)		117,157
Obligations of state and political subdivisions	62,151		—		62,151		—		(12,066)		50,085
Corporate bonds	30,000		—		30,000		—		(1,794)		28,206
Total held-to-maturity	$	935,142	$	—	$	935,142	$	226	$	(152,152)	$	783,216
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
1 Amortized cost and fair values exclude accrued interest receivable of $2.6 million and $3.7 million at September 30, 2023 and December 31, 2022, respectively, which is included in interest receivable and other assets in the consolidated statements of condition.

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 our 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)
September 30, 2023
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC, FNMA and GNMA	$	84,654	$	2	$	(13,263)	$	—	$	71,393
CMOs issued by FHLMC	307,119		—		(37,236)		—		269,883
CMOs issued by FNMA	30,832		—		(4,012)		—		26,820
CMOs issued by GNMA	20,505		—		(3,668)		—		16,837
SBA-backed securities	31,389		—		(3,166)		—		28,223
Debentures of government- sponsored agencies	129,137		—		(11,971)		—		117,166

U.S. Treasury securities	11,918		—		(1,703)		—		10,215
Obligations of state and political subdivisions	102,493		—		(18,771)		—		83,722
Corporate bonds	36,991		—		(2,435)		—		34,556

Total available-for-sale	$	755,038	$	2	$	(96,225)	$	—	$	658,815
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
1 Amortized cost and fair value exclude accrued interest receivable of $2.7 million and $3.2 million at September 30, 2023 and December 31, 2022, 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 was no impact to net income.


	September 30, 2023								December 31, 2022
	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	$	—	$	—	$	25,103	$	24,205	$	450	$	446	$	1,254	$	1,239
After one but within five years	88,242		83,291		327,723		297,206		87,418		83,663		335,813		307,843
After five years through ten years	304,952		247,742		99,406		85,685		262,072		222,280		185,997		166,273
After ten years	541,948		452,183		302,806		251,719		622,267		538,850		369,541		326,741
Total	$	935,142	$	783,216	$	755,038	$	658,815	$	972,207	$	845,239	$	892,605	$	802,096


	Three months ended				Nine months ended
(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Available-for-sale:
Sales proceeds	$	79,840	$	10,664	$	79,840	$	10,664
Gross realized gains	5		17		5		17
Gross realized losses	(2,798)		(80)		(2,798)		(80)
Sale of equity securities: 1
Sales proceeds	2,807		—		2,807		—
Gross realized gain	2,807		—		2,807		—


(in thousands)	September 30, 2023		December 31, 2022
Pledged to the State of California:
Secure public deposits in compliance with the Local Agency Security Program	$	203,936	$	231,307
Collateral for trust deposits	649		669
Collateral for Wealth Management and Trust Services checking account	547		564
Total investment securities pledged to the State of California	205,132		232,540
Bankruptcy trustee deposits pledged with Federal Reserve Bank	1,321		1,686
Pledged to FHLB Securities-Backed Credit Program	386,713		—
Pledged to the Federal Reserve BTFP	269,961		—
Total pledged investment securities	$	863,127	$	234,226


September 30, 2023	< 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	$	—	$	—	$	249,726	$	(61,870)	$	249,726	$	(61,870)
CMOs issued by FHLMC	4,311		(68)		181,530		(33,380)		185,841		(33,448)
CMOs issued by FNMA	41,398		(2,413)		53,508		(6,712)		94,906		(9,125)
CMOs issued by GNMA	11,481		(154)		25,859		(4,662)		37,340		(4,816)
SBA-backed securities	—		—		1,713		(140)		1,713		(140)
Debentures of government-sponsored agencies	—		—		117,157		(28,893)		117,157		(28,893)
Obligations of state and political subdivisions	3,034		(43)		47,051		(12,023)		50,085		(12,066)
Corporate bonds	—		—		28,206		(1,794)		28,206		(1,794)
Total held-to-maturity	60,224		(2,678)		704,750		(149,474)		764,974		(152,152)
Available-for-sale:
MBS pass-through securities issued by FHLMC, FNMA and GNMA	—		—		70,980		(13,263)		70,980		(13,263)
CMOs issued by FHLMC	—		—		269,883		(37,236)		269,883		(37,236)
CMOs issued by FNMA	—		—		26,820		(4,012)		26,820		(4,012)
CMOs issued by GNMA	—		—		16,837		(3,668)		16,837		(3,668)
SBA-backed securities	—		—		28,223		(3,166)		28,223		(3,166)
Debentures of government- sponsored agencies	—		—		117,166		(11,971)		117,166		(11,971)
U.S. Treasury securities	—		—		10,215		(1,703)		10,215		(1,703)

Obligations of state and political subdivisions	1,196		(36)		82,526		(18,735)		83,722		(18,771)
Corporate bonds	—		—		34,556		(2,435)		34,556		(2,435)
Asset-backed securities	—		—		—		—		—		—
Total available-for-sale	1,196		(36)		657,206		(96,189)		658,402		(96,225)
Total securities at loss position	$	61,420	$	(2,714)	$	1,361,956	$	(245,663)	$	1,423,376	$	(248,377)


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 loss position	$	714,008	$	(57,620)	$	903,222	$	(159,961)	$	1,617,230	$	(217,581)

Securities issued by government-sponsored enterprises, 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.

No allowances for credit losses have been recognized on available-for-sale securities in an unrealized loss position, as management did not believe any of the securities were impaired due to credit risk factors at either September 30, 2023 or December 31, 2022. In addition, for any available-for-sale securities in an unrealized loss position at September 30, 2023 and December 31, 2022, the Bank assessed whether it intended to sell the securities, or if it was more likely than not that it would be required to sell the securities before recovery of its amortized cost basis, which would require a write-down to fair value through net income. Because the Bank did not intend to sell those securities that were in an unrealized loss position, and it was not more-likely-than-not that the Bank would be required to sell the securities before recovery of their amortized cost bases, the Bank determined that no write-down was necessary as of the reporting date.

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 September 30, 2023 and December 31, 2022. 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 September 30, 2023 and December 31, 2022. On October 26, 2023, FHLB announced a cash dividend for the third quarter of 2023 at an annualized dividend rate of 8.25% to be distributed on November 9, 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 December 31, 2022. These shares had a carrying value of zero and were 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 lacked a readily determinable fair value. On July 13, 2023, the Bank sold the entirety of its remaining investment in Visa Inc. Class B restricted common stock for a $2.8 million gain.

We invest in low-income housing tax credit funds as a limited partner, which totaled $2.1 million and $2.5 million recorded in other assets as of September 30, 2023 and December 31, 2022, respectively. In the first nine months of 2023, we recognized $450 thousand of low-income housing tax credits and other tax benefits, offset by $377 thousand of amortization expense of low-income housing tax credit investment, as a component of income tax expense. As of September 30, 2023, our unfunded commitments for these low-income housing tax credit funds totaled $346 thousand. We did not recognize any impairment losses on these low-income housing tax credit investments during the first nine months of 2023 or 2022, as the value of the future tax benefits exceeds the carrying value of the investments.