Investments

3 Months Ended

Mar. 31, 2021

The following table presents a summary of investment securities at March 31, 2021 and December 31, 2020:


	Amortized Cost		Unrealized				Fair Value
			Gains		Losses
	(In thousands)
At March 31, 2021
Investment securities available-for-sale at fair value:
U.S. government and agencies	$	19,964	$	650	$	—	$	20,614
Government-sponsored entities	137,866		3,619		—		141,485
Municipal bonds	325,312		17,668		(585)		342,395
Mortgage-backed securities (1)	836,253		12,198		(13,537)		834,914
Total	$	1,319,395	$	34,135	$	(14,122)	$	1,339,408

Investment securities held-to-maturity at amortized cost:

Mortgage-backed securities (1)	$	31,943	$	688	$	—	$	32,631
Total	$	31,943	$	688	$	—	$	32,631

Equity securities at fair value:
Money market mutual funds (2)	$	39,708	$	—	$	—	$	39,708
Total	$	39,708	$	—	$	—	$	39,708

At December 31, 2020
Investment securities available-for-sale at fair value:
U.S. government and agencies	$	19,962	$	1,022	$	—	$	20,984
Government-sponsored entities	142,985		4,801		—		147,786
Municipal bonds	324,422		22,177		(11)		346,588
Mortgage-backed securities (1)	711,144		17,805		(614)		728,335
Total	$	1,198,513	$	45,805	$	(625)	$	1,243,693

Investment securities held-to-maturity at amortized cost:

Mortgage-backed securities (1)	$	35,223	$	719	$	—	$	35,942
Total	$	35,223	$	719	$	—	$	35,942

Equity securities at fair value:
Money market mutual funds (2)	$	41,452	$	—	$	—	$	41,452
Total	$	41,452	$	—	$	—	$	41,452

_____________________

(1)All Mortgage-backed securities are guaranteed by the U.S. government, U.S. government agencies, or government-sponsored entities.

(2)Money market mutual funds maintain a constant net asset value of $1.00 and therefore have no unrealized gain or loss.

The Company adopted ASU 2016-13 as of January 1, 2020. Under ASU 2016-13, the Company is required to assess the investment portfolio for credit impairment. The Company considers the Investment securities held-to-maturity portfolio to meet the "zero loss" expectation requirements. All Investment securities held-to-maturity owned by the Company are AAA- rated mortgage-backed securities that are backed by the guarantees of the U.S. government, U.S. government agencies or government-sponsored entities. The Company has experienced zero losses for these securities. In addition, as of March 31, 2021 and December 31, 2020, no Investment securities held-to-maturity were past due. Therefore, no credit allowance was recorded on the Investment securities held-to-maturity portfolio.

The Company evaluated the Investment securities available-for-sale on a security by security basis by assessing the extent and duration of unrealized loss positions, significant deterioration in the financial performance of the issuer, significant adverse changes in the market, or other factors that could raise significant concerns about the issuer's ability to continue as a going concern. The Company identified no security with impairment as of March 31, 2021 and December 31, 2020. Therefore, no credit allowance was booked on the Investment securities available-for-sale portfolio. See Part I. Item 1. “Notes to Unaudited Consolidated Financial Statements - Note 15: Recent Accounting Pronouncements” for additional information on ASU 2016-13.

The following table presents the maturities of Investment securities available-for-sale, based on contractual maturity, as of March 31, 2021. Certain securities are callable before their final maturity. Additionally, certain securities (such

as Mortgage-backed securities) are shown within the table below based on their final (contractual) maturity, but due to prepayments and amortization are expected to have shorter lives.


	Investment Securities Available-for-sale
	Amortized Cost		Fair Value
	(In thousands)
Within one year	$	78,206	$	79,090
After one, but within five years	258,270		267,989
After five, but within ten years	227,730		237,588
Greater than ten years	755,189		754,741
Total	$	1,319,395	$	1,339,408

The following table presents the maturities of Investment securities held-to-maturity, based on contractual maturity, as of March 31, 2021.


	Investment Securities Held-to-maturity
	Amortized Cost		Fair Value
	(In thousands)


After five, but within ten years	$	26,376	$	26,970
Greater than ten years	5,567		5,661
Total	$	31,943	$	32,631

The following table presents the maturities of Equity securities, based on contractual maturity, as of March 31, 2021.


	Equity Securities
	Amortized Cost		Fair Value
	(In thousands)
Within one year	$	39,708	$	39,708



Total	$	39,708	$	39,708

During the three months ended March 31, 2021 and 2020, there were no sales of Investment securities available-for-sale, Investment securities held-to-maturity, or Equity securities.

The following tables present information regarding securities at March 31, 2021 and December 31, 2020 having temporary impairment, due to the fair values having declined below the amortized cost of the individual securities, and the time period that the investments have been temporarily impaired. As of March 31, 2021, there were no Investment securities held-to-maturity having temporary impairment.


	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		# of Securities
	(In thousands, except number of securities)
March 31, 2021
Investment securities available-for-sale


Municipal bonds	$	26,139	$	(585)	$	—	$	—	$	26,139	$	(585)	9
Mortgage-backed securities (1)	436,241		(13,456)		4,989		(81)		441,230		(13,537)		59

Total	$	462,380	$	(14,041)	$	4,989	$	(81)	$	467,369	$	(14,122)	68


	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		# of Securities
	(In thousands, except number of securities)
December 31, 2020
Investment securities available-for-sale


Municipal bonds	$	2,344	$	(11)	$	—	$	—	$	2,344	$	(11)	2
Mortgage-backed securities (1)	126,545		(519)		5,411		(95)		131,956		(614)		41

Total	$	128,889	$	(530)	$	5,411	$	(95)	$	134,300	$	(625)	43

_____________________

(1)All Mortgage-backed securities are guaranteed by the U.S. government, U.S. government agencies, or government-sponsored entities.

As of March 31, 2021, the Mortgage-backed securities in the first table above had Standard and Poor’s credit ratings of at least AAA. As of March 31, 2021, the Municipal securities in the first table above had Standard and Poor's credit ratings of AAA and AA+. As of March 31, 2021, the Company determined that the unrealized losses on investments, since their purchase, is primarily attributed to changes in interest rates and not as a result of the deterioration of credit quality. As of March 31, 2021, the Company had no intent to sell any securities in an unrealized loss position, and it is not more likely than not that the Company would be forced to sell any of these securities prior to the full recovery of all unrealized loss amounts.

Other investments

The Bank invests in low-income housing tax credits, which are included in Other assets, to encourage private capital investment in the construction and rehabilitation of low-income housing. The Bank makes these investments as an indirect subsidy that allows investors, such as the Bank, in a flow-through limited liability entity, such as limited partnerships or limited liability companies that manage or invest in qualified affordable housing projects, to receive the benefits of the tax credits allocated to the entity that owns the qualified affordable housing project. The Bank also holds partnership interests in venture capital funds formed to provide financing to small businesses and to promote community development.

Other investments, which are included in Other assets, can be temporarily impaired when the fair values decline below the amortized costs of the individual investments. There were no other investments with unrealized losses as of March 31, 2021 or December 31, 2020. The Bank’s other investments primarily include low-income housing partnerships which generate tax credits. The Bank also holds partnership interests in small business investment companies formed to provide financing to small businesses and to promote community development. The Bank had $74.0 million and $75.7 million in other investments included in Other assets as of March 31, 2021 and December 31, 2020, respectively.