Investments

12 Months Ended

Dec. 31, 2022

The following tables summarize the amortized cost and fair value of investments available-for-sale at December 31, 2022 and 2021, and the corresponding amounts of gross unrealized gains and losses.


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Mortgage-backed investments:
Fannie Mae	$	11,800	$	—	$	(1,860)	$	9,940
Freddie Mac	13,720		—		(1,831)		11,889
Ginnie Mae	29,426		18		(1,601)		27,843
Other	34,295		—		(1,906)		32,389
Municipal bonds	36,968		17		(6,102)		30,883
U.S. Government agencies	76,718		6		(2,370)		74,354
Corporate bonds	33,000		—		(2,520)		30,480

	$	235,927	$	41	$	(18,190)	$	217,778


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Mortgage-backed investments:
Fannie Mae	$	12,920	$	146	$	(88)	$	12,978
Freddie Mac	13,039		115		(330)		12,824
Ginnie Mae	23,728		105		(146)		23,687
Other	11,278		47		(61)		11,264
Municipal bonds	36,078		677		(289)		36,466
U.S. Government agencies	41,711		61		(338)		41,434
Corporate bonds	29,997		505		(207)		30,295
	$	168,751	$	1,656	$	(1,459)	$	168,948

There were $2.4 million of investments classified as held-to-maturity at both December 31, 2022, and 2021. In January 2020, the Company purchased three annuity contracts to be held long-term to satisfy the benefit obligation associated with certain supplemental executive retirement plan agreements. The annuities are reported at amortized cost as investments held-to-maturity on the Company’s consolidated balance sheet. The amortized cost includes increases from interest income.

The amortized cost and estimated fair value of investments available-for-sale at December 31, 2022, by expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Investments not due at a single maturity date, primarily mortgage‑backed investments, are shown separately.


	December 31, 2022
	Amortized Cost		Fair Value
	(In thousands)
Due within one year	$	—	$	—
Due after one year through five years	50,100		48,732
Due after five years through ten years	28,769		26,079
Due after ten years	67,817		60,906
	146,686		135,717
Mortgage-backed investments	89,241		82,061

	$	235,927	$	217,778

Under Washington State law, in order to participate in the public funds program the Company is required to pledge eligible securities as collateral in an amount equal to 50% of the public deposits held. Investments with a carrying value of $21.0 million and $23.1 million were pledged as collateral for public deposits at December 31, 2022, and 2021, respectively, both of which exceeded the minimum collateral requirements established by the Washington Public Deposit Protection Commission. At both December 31, 2022, and 2021, there were no investments pledged as collateral for FHLB advances.

Sales and other redemptions of available-for-sale investments were as follows:


	Year Ended December 31,
	2022		2021
	(In thousands)
Proceeds	$	11,088	$	20,042
Gross gains	27		104
Gross losses	—		(72)

The following tables summarize the aggregate fair value and gross unrealized loss by length of time those investments have been continuously in an unrealized loss position at December 31, 2022 and 2021.


	December 31, 2022
	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
	(In thousands)
Mortgage-backed investments:
Fannie Mae	$	6,710	$	(1,073)	$	3,226	$	(787)	$	9,936	$	(1,860)
Freddie Mac	4,677		(272)		6,476		(1,559)		11,153		(1,831)
Ginnie Mae	7,645		(310)		13,714		(1,291)		21,359		(1,601)
Other	27,430		(1,614)		4,959		(292)		32,389		(1,906)
Municipal bonds	7,892		(680)		20,901		(5,422)		28,793		(6,102)
U.S. Government agencies	43,664		(1,184)		30,224		(1,186)		73,888		(2,370)
Corporate bonds	17,241		(1,259)		13,239		(1,261)		30,480		(2,520)
	$	115,259	$	(6,392)	$	92,739	$	(11,798)	$	207,998	$	(18,190)


	December 31, 2021
	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
	(In thousands)
Mortgage-backed investments:
Fannie Mae	$	6,279	$	(88)	$	—	$	—	$	6,279	$	(88)
Freddie Mac	4,709		(233)		3,214		(97)		7,923		(330)
Ginnie Mae	18,539		(146)		—		—		18,539		(146)
Other	4,815		(61)		—		—		4,815		(61)
Municipal bonds	18,805		(264)		1,059		(25)		19,864		(289)
U.S. Government agencies	10,123		(34)		21,682		(304)		31,805		(338)
Corporate bonds	985		(15)		3,809		(192)		4,794		(207)
	$	64,255	$	(841)	$	29,764	$	(618)	$	94,019	$	(1,459)

At December 31, 2022, and 2021, the Company had 123 and 51 securities, respectively, with a gross unrealized loss position. Management reviewed the financial condition of the entities underlying the securities at both December 31, 2022 and 2021, and determined that no OTTI was required. Management believes that, while actual fluctuation in unrealized losses will occur over the life of an investment security, the temporary impairment on the investment securities that were in an unrealized loss position at December 31, 2022 and 2021, will be incrementally relieved as the individual investment securities approach their respective contractual maturity dates. The unrealized losses relate principally to the general change in interest rate and illiquidity, and not credit quality. As management does not intend to sell the security, and it is likely that it will not be required to sell the security before its anticipated recovery, no declines are deemed to be other-than-temporary.