

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
Investment securities available-for-sale:
September 30, 2021
U.S. Treasury	$	77,803	$	1,665	$	(126)	$	79,342
Agency	531,867		5,252		(7,026)		530,093
Corporate	383,910		5,381		(2,900)		386,391
Municipal bonds	1,237,923		27,585		(9,642)		1,255,866
Collateralized mortgage obligations	665,851		1,109		(4,729)		662,231
Mortgage-backed securities	1,807,758		6,194		(18,060)		1,795,892
Total investment securities available-for-sale	$	4,705,112	$	47,186	$	(42,483)	$	4,709,815





December 31, 2020
U.S. Treasury	$	30,153	$	2,380	$	—	$	32,533
Agency	666,702		24,292		(608)		690,386
Corporate	412,223		3,591		(506)		415,308
Municipal bonds	1,412,012		37,260		(3,253)		1,446,019
Collateralized mortgage obligations	513,259		819		(712)		513,366
Mortgage-backed securities	812,384		21,662		(543)		833,503
Total investment securities available-for-sale	$	3,846,733	$	90,004	$	(5,622)	$	3,931,115



(Dollars in thousands)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrecognized Gain		Gross Unrecognized Loss		Estimated Fair Value
Investment securities held-to-maturity:
September 30, 2021
Municipal bonds	$	154,399	$	(11)	$	154,388	$	—	$	(2,225)	$	152,163
Mortgage-backed securities	14,656		—		14,656		803		—		15,459
Other	1,532		—		1,532		—		—		1,532
Total investment securities held-to-maturity	$	170,587	$	(11)	$	170,576	$	803	$	(2,225)	$	169,154

The Company reassesses classification of certain investments as part of the ongoing review of the investment securities portfolio. During the third quarter of 2021, the Company transferred approximately $157.6 million of municipal bonds, which the Company intends and has the ability to hold to maturity, from available-for-sale to held-to-maturity securities. The transfer of these securities was accounted for at fair value. These securities had a net carrying amount of $154.5 million with a pre-tax unrealized loss of $3.2 million, which was reflected as a discount on the date of transfer. This discount, as well as the related unrealized loss in accumulated other comprehensive income, will be amortized into interest income as a yield adjustment over the remaining term of the securities. The amortization of the unrealized loss reported in accumulated other comprehensive income will offset the effect on interest income of the amortization of the discount. No gains or losses were recorded at the time of transfer.

Unrealized gains and losses on investment securities available-for-sale are recognized in stockholders’ equity as accumulated other comprehensive income or loss. At September 30, 2021, the Company had accumulated other comprehensive income of $4.7 million, or $3.4 million net of tax, compared to accumulated other comprehensive income of $84.4 million, or $60.3 million net of tax, at December 31, 2020.

For investment securities transferred from available-for-sale to held-to-maturity, the unrealized gains and losses at the date of transfer continue to be reported in stockholders’ equity as accumulated other comprehensive income and are amortized over the remaining lives of the securities with an offsetting entry to interest income as an adjustment of yield. At September 30, 2021, the gross unrealized loss on municipal bonds transferred from available-for-sale to held-to-maturity in accumulated other comprehensive income was $3.1 million, or $2.2 million net of tax.

The table below summarizes the number, fair value, and gross unrealized holding losses of the Company’s investment securities available-for-sale in an unrealized loss position for which an allowance for credit losses has not been recorded as of the dates indicated, aggregated by investment category and length of time in a continuous loss position.


	September 30, 2021
	Less than 12 Months					12 Months or Longer					Total
(Dollars in thousands)	Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses
Investment securities available-for-sale:
U.S. Treasury	2	$	32,626	$	(126)	—	$	—	$	—	2	$	32,626	$	(126)
Agency	24	339,270		(5,365)		12	64,991		(1,661)		36	404,261		(7,026)
Corporate	8	88,666		(1,916)		1	20,346		(984)		9	109,012		(2,900)
Municipal bonds	108	651,169		(9,102)		2	11,068		(540)		110	662,237		(9,642)
Collateralized mortgage obligations	30	302,104		(4,297)		5	44,615		(432)		35	346,719		(4,729)
Mortgage-backed securities.	113	1,570,327		(17,961)		1	7,395		(99)		114	1,577,722		(18,060)
Total investment securities available-for-sale	285	$	2,984,162	$	(38,767)	21	$	148,415	$	(3,716)	306	$	3,132,577	$	(42,483)


	December 31, 2020
	Less than 12 Months					12 Months or Longer					Total
(Dollars in thousands)	Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses
Investment securities available-for-sale:

Agency	4	$	74,194	$	(307)	9	$	10,434	$	(301)	13	$	84,628	$	(608)
Corporate	9	71,226		(506)		—	—		—		9	71,226		(506)
Municipal bonds	56	312,894		(3,253)		—	—		—		56	312,894		(3,253)
Collateralized mortgage obligations	21	215,603		(710)		1	431		(2)		22	216,034		(712)
Mortgage-backed securities	16	139,071		(543)		—	—		—		16	139,071		(543)
Total investment securities available-for-sale	106	$	812,988	$	(5,319)	10	$	10,865	$	(303)	116	$	823,853	$	(5,622)

The Company reviews individual securities classified as available-for-sale to determine whether a decline in fair value below the amortized cost basis is deemed credit related or due to other factors such as changes in interest rates and general market conditions. An ACL on available-for-sale investment securities is recorded when the fair value of the investment is below its amortized cost and the decline in fair value has been deemed, through the Company’s qualitative assessment, to be credit related. Non-credit related declines in fair value of available-for-sale investment securities, which may be attributed to changes in interest rates and other market related factors, are not recorded through an ACL. Such declines are recorded as an adjustment to accumulated other comprehensive income, net of tax. In the event the Company is required to sell or has the intent to sell an available-for-sale security that has experienced a decline in fair value below its amortized cost, the Company writes the amortized cost of the security down to fair value in the current period.

Credit losses on held-to-maturity investment securities are recorded at the time of purchase or acquisition and when the Company has designated securities as held-to-maturity. Credit losses on held-to-maturity investment securities are representative of current expected credit losses that may be incurred over the life of the investment.

The Company determines credit losses on both available-for-sale and held-to-maturity investment securities through the use of a discounted cash flow approach using the security’s effective interest rate. The ACL is measured as the amount by which an investment security’s amortized cost exceeds the net present value of expected future cash flows. However, the amount of credit losses for available-for-sale investment securities is limited to the amount of a security’s unrealized loss. The ACL is established through a charge to provision for credit losses in current period earnings.

During the second quarter of 2020, the Company acquired $829.9 million of available-for-sale securities in connection with the acquisition of Opus. Such securities were evaluated and it was determined that there were no investment securities classified as purchase credit deteriorated upon acquisition and, as a result, no allowance for credit losses was recorded.

At September 30, 2021, the Company had an ACL of $11,000 for held-to-maturity investment securities classified as municipal bonds. These securities were transferred from available-for-sale to held-to-maturity during the third quarter of 2021. There was no ACL for held-to-maturity investment securities at December 31, 2020. The Company recognized $11,000 of provision for credit losses for held-to-maturity investment securities during the three months and nine months ended September 30, 2021. There was no provision for credit losses recognized for held-to-maturity investment securities during the three months June 30, 2021, and September 30, 2020, and the nine months ended September 30, 2020.

The Company had no ACL for available-for-sale or investment securities at September 30, 2021 and December 31, 2020. As of September 30, 2021, the Company had not recorded credit losses on certain available-for-sale securities that were in an unrealized loss position due to the high quality of the investments, with investment grade ratings, and many of them are issued by U.S. government agencies. Additionally, the Company continues to receive contractual principal and interest payments in a timely manner. The Company performed a qualitative assessment of these investments as of September 30, 2021, and does not believe the declines in fair value are credit related. There was no provision for credit losses recognized for available-for-sale investment securities during the three months ended September 30, 2021, June 30, 2021, or September 30, 2020, and the nine months ended September 30, 2021 and September 30, 2020.

At September 30, 2021 and December 31, 2020, there were no available-for-sale or held-to-maturity securities in nonaccrual status. All securities in the portfolio were current with their contractual principal and interest payments. At September 30, 2021 and December 31, 2020, there were no securities purchased with deterioration in credit quality since their origination. At September 30, 2021 and December 31, 2020, there were no collateral dependent available-for-sale or held-to-maturity securities.


	Vintage
(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Total
Investment securities available-for-sale at fair value:
U.S. Treasury
Aaa - Aa3	$	32,973	$	14,634	$	—	$	21,274	$	10,461	$	—	$	79,342


Agency
Aaa - Aa3	24,393		324,241		44,487		76,415		—		46,390		515,926

Baa1 - Baa3	—		—		—		5,715		—		8,452		14,167
Corporate debt

A1 - A3	79,252		57,799		—		—		17,864		10,029		164,944
Baa1 - Baa3	36,473		100,614		70,704		—		—		13,656		221,447
Municipal bonds
Aaa - Aa3	118,941		725,524		294,323		32,429		50,536		33,264		1,255,017
A1 - A3	—		—		—		—		—		849		849

Collateralized mortgage obligations
Aaa - Aa3	212,687		224,252		86,604		18,523		14,199		105,966		662,231


Mortgage-backed securities
Aaa - Aa3	1,250,191		391,394		101,935		6,891		25,280		20,201		1,795,892


Total investment securities available-for-sale	1,754,910		1,838,458		598,053		161,247		118,340		238,807		4,709,815
Investment securities held-to-maturity at amortized cost:
Municipal bonds
Aaa - Aa3	—		154,399		—		—		—		—		154,399


Mortgage-backed securities
Aaa - Aa3	—		—		—		4,206		3,767		6,683		14,656


Other


Baa1 - Baa3	—		—		—		600		—		932		1,532
Total investment securities held-to-maturity	—		154,399		—		4,806		3,767		7,615		170,587
Total investment securities	$	1,754,910	$	1,992,857	$	598,053	$	166,053	$	122,107	$	246,422	$	4,880,402

During the three months ended September 30, 2021, June 30, 2021, and September 30, 2020, the Company recognized gross gains on sales of available-for-sale securities in the amount of $4.2 million, $10.0 million, and $1.2 million, respectively. The Company did not recognize any gross losses during the three months ended September 30, 2021. During the three months ended June 30, 2021 and September 30, 2020, the Company recognized gross losses on sales of available-for-sale securities in the amount of $5.0 million and $12,000, respectively. The Company had net proceeds from the sales of available-for-sale securities of $165.8 million, $285.3 million, and $212.5 million during the three months ended September 30, 2021, June 30, 2021, and September 30, 2020, respectively.

During the nine months ended September 30, 2021 and 2020, the Company recognized gross gains on sales of available-for-sale securities in the amount of $18.5 million and $10.4 million, respectively. During the nine months ended September 30, 2021 and 2020, the Company recognized gross losses on the sales of available-for sale securities in the amount of $5.1 million and $1.5 million, respectively. The Company had net proceeds from the sales of available-for-sale securities of $630.4 million and $558.9 million during the nine months ended September 30, 2021 and 2020, respectively.


	Due in One Year or Less				Due after One Year through Five Years				Due after Five Years through Ten Years				Due after Ten Years				Total
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Investment securities available-for-sale:
U.S. Treasury	$	—	$	—	$	30,126	$	31,734	$	47,677	$	47,608	$	—	$	—	$	77,803	$	79,342
Agency	—		—		352,023		353,184		135,567		134,426		44,277		42,483		531,867		530,093
Corporate	10,021		10,029		21,178		21,227		352,711		355,135		—		—		383,910		386,391
Municipal bonds	—		—		3,528		3,731		95,420		96,849		1,138,975		1,155,286		1,237,923		1,255,866
Collateralized mortgage obligations	—		—		41,692		41,631		226,958		223,612		397,201		396,988		665,851		662,231
Mortgage-backed securities	—		—		12,098		12,704		709,280		709,155		1,086,380		1,074,033		1,807,758		1,795,892
Total investment securities available-for-sale	10,021		10,029		460,645		464,211		1,567,613		1,566,785		2,666,833		2,668,790		4,705,112		4,709,815
Investment securities held-to-maturity:
Municipal bonds	—		—		—		—		—		—		154,399		152,163		154,399		152,163
Mortgage-backed securities	—		—		—		—		—		—		14,656		15,459		14,656		15,459
Other	—		—		—		—		—		—		1,532		1,532		1,532		1,532
Total investment securities held-to-maturity	—		—		—		—		—		—		170,587		169,154		170,587		169,154
Total investment securities	$	10,021	$	10,029	$	460,645	$	464,211	$	1,567,613	$	1,566,785	$	2,837,420	$	2,837,944	$	4,875,699	$	4,878,969

The Company’s equity securities primarily consist of FHLB and Federal Reserve Bank of San Francisco (“FRB”) stock, which are considered restricted securities and held as a condition of membership of the FHLB and the Board of Governors of the Federal Reserve System. These equity securities without readily determinable fair values are carried at cost less impairment. At September 30, 2021, the Company had $17.3 million in FHLB stock, $74.5 million in FRB stock, and $26.7 million in other stock, all carried at cost. During the three months ended September 30, 2021, June 30, 2021, and September 30, 2020, the FHLB did not repurchase any of the Company’s excess FHLB stock through its stock repurchase program.