Subsequent Events

9 Months Ended

Sep. 30, 2021

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Quarterly cash dividend

On October 19, 2021, the Corporation’s Board of Directors declared a cash dividend of $0.33 per share, payable on November 12, 2021 to shareholders of record on November 1, 2021.

Branch consolidations

On November 5, 2021, the Bank consolidated two branch offices, one in San Diego County and the other in Los Angeles County, both in California, into nearby branch offices with minimal disruption to clients and daily operations. The consolidated branches were identified largely based on the proximity of neighboring branches, deposit base, historic growth, and market opportunity to improve further the overall efficiency of operations, as well as the Bank's goals related to Fair Lending and the Community Reinvestment Act. After the branch consolidations, the Bank operates 61 branches in major metropolitan markets in California, Washington, Oregon, Arizona, and Nevada.

Transfers of investment securities available-for-sale to held-to-maturity

The Company reassessed classification of certain investments, and effective October 1, 2021, the Company transferred approximately $165.5 million of municipal bonds from available-for-sale to held-to-maturity securities at fair value. These securities had an unrealized loss of $3.4 million at the transfer date, 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.

Fair value hedge

On November 1, 2021, as part of its interest rate sensitivity management, the Company entered into pay-fixed and receive-floating interest rate swaps with an aggregate notional amount of $300.0 million of certain fixed rate loans to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. These interest rate swaps are designated as fair value hedges. Under the swap agreement, the Company receives variable-rate interest payments based on USD-SOFR-COMPOUND in exchange for making fixed-rate payments over the lives of the contracts without exchanging the notional amounts.