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Note 3 - Securities
 6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]
NOTE
3.
SECURITIES
 
The following tables present the amortized costs, unrealized gains, unrealized losses and estimated fair values of our investment securities as of
June 30, 2019,
and
December 31, 2018.
 
   
As of June 30, 2019
  
   
 
 
 
  
Gross
    
Gross
    
 
 
 
   
Amortized
    
Unrealized
    
Unrealized
    
Estimated
  
(Amounts in thousands)
  
Cost
    
Gain
    
Loss
    
Fair Value
  
Available-for-sale securities:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
U.S. government & agencies
   $
44,334
     $
531
     $
(28
 )   $
44,837
  
Obligations of state and political subdivisions
    
43,585
      
1,434
      
(16
 )    
45,003
  
Residential mortgage-backed securities and collateralized mortgage obligations
    
166,683
      
2,068
      
(666
 )    
168,085
  
Corporate securities
    
3,014
      
—
      
(36
 )    
2,978
  
Commercial mortgage-backed securities
    
24,744
      
260
      
(136
 )    
24,868
  
Other asset-backed securities
    
48
      
—
      
—
      
48
  
Total
   $
282,408
     $
4,293
     $
(882
 )   $
285,819
  
 
 
   
As of December 31, 2018
  
   
 
 
 
  
Gross
    
Gross
    
 
 
 
   
Amortized
    
Unrealized
    
Unrealized
    
Estimated
  
(Amounts in thousands)
  
Cost
    
Gain
    
Loss
    
Fair Value
  
Available-for-sale securities:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
U.S. government & agencies
   $
40,215
     $
202
     $
(330
 )   $
40,087
  
Obligations of state and political subdivisions
    
50,037
      
1,082
      
(589
 )    
50,530
  
Residential mortgage-backed securities and collateralized mortgage obligations
    
142,355
      
129
      
(3,981
 )    
138,503
  
Corporate securities
    
3,022
      
—
      
(100
 )    
2,922
  
Commercial mortgage-backed securities
    
25,446
      
17
      
(701
 )    
24,762
  
Other asset-backed securities
    
123
      
1
      
—
      
124
  
Total
   $
261,198
     $
1,431
     $
(5,701
 )   $
256,928
  
 
The following table presents the expected maturities of investment securities at
June 30, 2019.
 
 
   
Available-For-Sale
  
(Amounts in thousands)
  
Amortized Cost
    
Fair Value
  
Amounts maturing in:
  
 
 
 
  
 
 
 
One year or less
   $
3,894
     $
3,895
  
After one year through five years
    
125,541
      
127,308
  
After five years through ten years
    
84,830
      
85,406
  
After ten years
    
68,143
      
69,210
  
Total
   $
282,408
     $
285,819
  
 
 
The amortized cost and fair value of residential mortgage-backed securities, collateralized mortgage obligations and commercial mortgage securities are presented by their expected average life, rather than contractual maturity, because the underlying loans
may
be repaid without prepayment penalties. 
 
At
June 30, 2019
and
December 31, 2018
securities with a fair value of
$74.3
million and
$68.8
million, respectively, were pledged as collateral to secure public fund deposits, Federal Home Loan Bank of San Francisco borrowings and for other purposes as required by law.
 
The following table presents the cash proceeds from sales of investment securities and the associated gross realized gains and gross realized losses that have been included in earnings for the
three
and
six
months ended
June 30, 2019
and
2018.
 
   
Three Months Ended June 30,
    
Six Months Ended June 30,
  
(Amounts in thousands)
  
2019
    
2018
    
2019
    
2018
  
Proceeds from sales of investment securities
   $
18,338
     $
1,107
     $
85,740
     $
20,505
  
                                 
Gross realized gains on sales of investment securities:
                                
U.S. government & agencies
   $
6
     $
—
     $
39
     $
—
  
Obligations of state and political subdivisions
    
115
      
4
      
294
      
156
  
Residential mortgage-backed securities and collateralized mortgage obligations
    
16
      
—
      
64
      
—
  
Commercial mortgage-backed securities
    
2
      
—
      
2
      
—
  
Total gross realized gains on sales of investment securities
    
139
      
4
      
399
      
156
  
                                 
Gross realized losses on sales of investment securities:
                                
U.S. government & agencies
    
—
      
—
      
(4
 )    
—
  
Obligations of state and political subdivisions
    
(12
 )    
—
      
(90
 )    
(71
 )
Residential mortgage-backed securities and collateralized mortgage obligations
    
(64
 )    
—
      
(149
 )    
—
  
Commercial mortgage-backed securities
    
(30
 )    
—
      
(31
 )    
—
  
Other asset-backed securities
    
—
      
—
      
—
      
(45
 )
Total gross realized losses on sales of investment securities
    
(106
 )    
—
      
(274
 )    
(116
 )
Gain on sales of investment securities, net
   $
33
     $
4
     $
125
     $
40
  
 
 
 
Investment securities that were in an unrealized loss position as of
June 30, 2019
and
December 31, 2018
are presented in the following tables, based on the length of time individual securities have been in an unrealized loss position.
 
   
As of June 30, 2019
  
   
Less Than 12 Months
    
12 Months or More
    
Total
  
   
Fair
    
Unrealized
    
Fair
    
Unrealized
    
Fair
    
Unrealized
  
(Amounts in thousands)
  
Value
    
Losses
    
Value
    
Losses
    
Value
    
Losses
  
Available-for-sale securities:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
U.S. government & agencies
   $
3,462
     $
(22
 )   $
1,958
     $
(6
 )   $
5,420
     $
(28
 )
Obligations of states and political subdivisions
    
409
      
(1
 )    
2,070
      
(15
 )    
2,479
      
(16
 )
Residential mortgage-backed securities and collateralized mortgage obligations
    
4,811
      
(11
 )    
56,087
      
(655
 )    
60,898
      
(666
 )
Corporate securities
    
—
      
—
      
2,978
      
(36
 )    
2,978
      
(36
 )
Commercial mortgage-backed securities
    
—
      
—
      
8,812
      
(136
 )    
8,812
      
(136
 )
Total temporarily impaired securities
   $
8,682
     $
(34
 )   $
71,905
     $
(848
 )   $
80,587
     $
(882
 )
 
   
As of December 31, 2018
  
   
Less Than 12 Months
    
12 Months or More
    
Total
  
   
Fair
    
Unrealized
    
Fair
    
Unrealized
    
Fair
    
Unrealized
  
(Amounts in thousands)
  
Value
    
Loss
    
Value
    
Loss
    
Value
    
Loss
  
Available-for-sale securities:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
U.S. government & agencies
   $
7,223
     $
(39
 )   $
12,274
     $
(291
 )   $
19,497
     $
(330
 )
Obligations of states and political subdivisions
    
5,545
      
(40
 )    
16,320
      
(549
 )    
21,865
      
(589
 )
Residential mortgage-backed securities and collateralized mortgage obligations
    
21,791
      
(183
 )    
93,038
      
(3,798
 )    
114,829
      
(3,981
 )
Corporate securities
    
—
      
—
      
2,922
      
(100
 )    
2,922
      
(100
 )
Commercial mortgage-backed securities
    
1,548
      
(7
 )    
20,176
      
(694
 )    
21,724
      
(701
 )
Total temporarily impaired securities
   $
36,107
     $
(269
 )   $
144,730
     $
(5,432
 )   $
180,837
     $
(5,701
 )
 
 
At
June 30, 2019
and
December 31, 2018,
the number of securities that were in an unrealized loss position was
69
and
163,
respectively. In the opinion of management, these securities are considered only temporarily impaired due to changes in market interest rates or widening of market spreads subsequent to the initial purchase of the securities, and
not
due to concerns regarding the underlying credit of the issuers or the underlying collateral. Our Investment Policy requires securities at the time of purchase to be rated
A3/A
- or higher by Moody’s, S&P and Fitch rating agencies. Management monitors the published credit ratings of our investment portfolio for material rating or outlook changes. For all private-label securities collateralized by mortgages, management also monitors the credit characteristics of the underlying mortgages to identify potential credit losses, if any, in the portfolio. Because the decline in fair value is
not
due to credit quality concerns, we have
no
plans to sell the securities before the recovery of their amortized cost, and the Bank has the ability to hold the securities to maturity these investments are
not
considered other-than-temporarily impaired.
 
The following table presents the characteristics of our securities that are in unrealized loss positions at
June 30, 2019
and
December 31, 2018.
 
   
Characteristics of securities in unrealized loss positions at
Available-for-sale securities:
  
June 30, 2019
and
December 31, 2018
U.S. government & agencies
  
Direct obligations of the U.S. Government or obligations guaranteed by U.S. Government agencies.
Obligations of states and political subdivisions
  
General obligation issuances or revenue securities secured by revenues from specific sources issued by municipalities and political subdivisions located within the U.S.
Residential mortgage-backed securities and collateralized mortgage obligations
  
Obligations of U.S. government sponsored entities or non-governmental entities collateralized by high quality mortgages on residential properties. Issuances by non-governmental entities usually include good credit enhancements. Of the residential mortgage-backed securities and collateralized mortgage obligations that we owned at
June 30, 2019
and
December 31, 2018,
82%
and
66%
were issued or guaranteed by U.S. government sponsored entities, respectively.
Corporate securities
  
Debt obligations generally issued or guaranteed by large U.S. corporate institutions.
Commercial mortgage-backed securities
  
Obligations of U.S. government sponsored entities or non-governmental entities collateralized by high quality mortgages on commercial properties. Issuances by non-governmental entities usually include good credit enhancements. Of the commercial mortgage-backed securities that we owned at
June 30, 2019
and
December 31, 2018,
95%
and
90%
were issued or guaranteed by U.S. government sponsored entities, respectively.
Other asset-backed securities
  
Obligations secured by high quality loans with good credit enhancements issued by non-governmental issuers.