Our investment securities portfolio consists of U.S. Treasury securities, obligations of state and political subdivisions, U.S. federal government agencies, such as the Government National Mortgage Association ("GNMA") and Small Business Administration ("SBA"), and U.S. government-sponsored enterprises ("GSEs"), such as the 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)
December 31, 2023
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC, FNMA and GNMA	$	306,261	$	—	$	306,261	$	—	$	(44,396)	$	261,865
CMOs issued by FHLMC	226,416		—		226,416		28		(24,869)		201,575
CMOs issued by FNMA	101,502		—		101,502		—		(4,779)		96,723
CMOs issued by GNMA	51,006		—		51,006		—		(5,235)		45,771
SBA-backed securities	1,853		—		1,853		—		(90)		1,763

Debentures of government-sponsored agencies	146,126		—		146,126		—		(21,994)		124,132
Obligations of state and political subdivisions	62,034		—		62,034		47		(7,884)		54,197
Corporate bonds	30,000		—		30,000		—		(1,196)		28,804
Total held-to-maturity	$	925,198	$	—	$	925,198	$	75	$	(110,443)	$	814,830
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 $3.6 million and $3.7 million at December 31, 2023 and 2022, 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, 2023
Securities of U.S. government-sponsored enterprises:
MBS pass-through securities issued by FHLMC, FNMA and GNMA	$	81,937	$	2	$	(9,516)	$	—	$	72,423
CMOs issued by FHLMC	266,407		—		(24,758)		—		241,649
CMOs issued by FNMA	23,987		—		(2,715)		—		21,272
CMOs issued by GNMA	20,006		—		(2,878)		—		17,128
SBA-backed securities	21,126		—		(1,655)		—		19,471
Debentures of government- sponsored agencies	73,899		—		(7,037)		—		66,862
U.S. Treasury securities	11,923		—		(1,300)		—		10,623

Obligations of state and political subdivisions	102,202		1		(10,321)		—		91,882
Corporate bonds	11,992		—		(1,274)		—		10,718
Asset-backed securities	—		—		—		—		—
Total available-for-sale	$	613,479	$	3	$	(61,454)	$	—	$	552,028
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 $2.3 million and $3.2 million at December 31, 2023 and 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 is no impact on net income.


	December 31, 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	$	—	$	—	$	101	$	100	$	450	$	446	$	1,254	$	1,239
After one but within five years	87,887		84,541		226,669		208,444		87,418		83,663		335,813		307,843
After five years through ten years	304,976		261,654		95,552		85,447		262,072		222,280		185,997		166,273
After ten years	532,335		468,635		291,157		258,037		622,267		538,850		369,541		326,741
Total	$	925,198	$	814,830	$	613,479	$	552,028	$	972,207	$	845,239	$	892,605	$	802,096


(in thousands)	December 31, 2023		December 31, 2022
Pledged to the State of California:
Secure public deposits in compliance with the Local Agency Security Program	$	287,436	$	231,307
Collateral for trust deposits	666		669
Collateral for Wealth Management and Trust Services checking account	562		564
Total investment securities pledged to the State of California	288,664		232,540
Bankruptcy trustee deposits pledged with Federal Reserve Bank	1,151		1,686
Pledged to FHLB Securities-Backed Credit Program	383,484		—
Pledged to the Federal Reserve "BTFP"	265,660		—
Total pledged investment securities	$	938,959	$	234,226


December 31, 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	$	—	$	—	$	261,865	$	(44,396)	$	261,865	$	(44,396)


CMOs issued by FHLMC	8,662		(21)		188,657		(24,848)		197,319		(24,869)
CMOs issued by FNMA	42,474		(411)		54,249		(4,368)		96,723		(4,779)
CMOs issued by GNMA	10,988		(244)		34,783		(4,991)		45,771		(5,235)
SBA-backed securities	—		—		1,763		(90)		1,763		(90)
Debentures of government-sponsored agencies	—		—		124,132		(21,994)		124,132		(21,994)
Obligations of state and political subdivisions	—		—		44,437		(7,884)		44,437		(7,884)
Corporate bonds	—		—		28,804		(1,196)		28,804		(1,196)
Total held-to-maturity	$	62,124	$	(676)	$	738,690	$	(109,767)	$	800,814	$	(110,443)
Available-for-sale:
MBS pass-through securities issued by FHLMC, FNMA and GNMA	$	—	$	—	$	72,146	$	(9,516)	$	72,146	$	(9,516)
CMOs issued by FHLMC	1,235		(7)		240,414		(24,751)		241,649		(24,758)
CMOs issued by FNMA	—		—		21,272		(2,715)		21,272		(2,715)
CMOs issued by GNMA	—		—		17,128		(2,878)		17,128		(2,878)
SBA-backed securities	—		—		19,471		(1,655)		19,471		(1,655)
Debentures of government-sponsored agencies	—		—		66,862		(7,037)		66,862		(7,037)
U.S. Treasury securities	—		—		10,623		(1,300)		10,623		(1,300)
Obligations of state and political subdivisions	666		(1)		90,655		(10,320)		91,321		(10,321)
Corporate bonds	—		—		10,718		(1,274)		10,718		(1,274)
Asset-backed securities	—		—		—		—		—		—

Total available-for-sale	$	1,901	$	(8)	$	549,289	$	(61,446)	$	551,190	$	(61,454)
Total securities at a loss position	$	64,025	$	(684)	$	1,287,979	$	(171,213)	$	1,352,004	$	(171,897)


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 GNMA	4,790		(235)		27,529		(3,617)		32,319		(3,852)
CMOs issued by FNMA	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	$	714,008	$	(57,620)	$	903,222	$	(159,961)	$	1,617,230	$	(217,581)

Securities issued by government-sponsored agencies, such as FNMA and FHLMC, usually have implicit credit support from 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 while FNMA and FHLMC remain under conservatorship. 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 does not believe any of the securities are impaired due to reasons of credit quality at either December 31, 2023 or 2022. In addition, for any available-for-sale securities in an unrealized loss position at December 31, 2023 and 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.

On July 7, 2023, the Bank entered into various interest rate swap agreements with notional values totaling $101.8 million to hedge balance sheet interest rate sensitivity and protect selected securities in its available-for-sale portfolio against changes in fair value related to changes in the benchmark interest rate. For additional details, refer to Note 14, Derivative Financial Instruments and Hedging Activities.

As a member of the FHLB, we are required to maintain a minimum investment in FHLB capital stock as 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, 2023 and 2022. The carrying amounts of these investments are reasonable estimates of fair value because the securities are restricted to member banks and 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, 2023 or 2022. On February 21, 2024, FHLB announced a cash dividend for the fourth quarter of 2023 at an annualized dividend rate of 8.75% to be distributed in mid-March 2024. 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 as of December 31, 2022. These shares had a carrying value of zero because they lacked a readily determinable fair value due to the restriction 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, and uncertainty about the conversion rate to Class A shares. 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 $2.0 million and $2.5 million recorded in other assets as of December 31, 2023 and 2022, respectively. In 2023, we recognized $600 thousand of low income housing tax credits and other tax benefits, offset by $503 thousand of amortization expense for low-income housing tax credit investments, as a component of income tax expense. As of December 31, 2023, our unfunded commitments for these low-income housing tax credit funds totaled $344 thousand. We did not recognize any impairment losses on these low-income housing tax credit investments during 2023 or 2022, as the value of the future tax benefits exceeds the carrying value of the investments.