CLFC » Topics » Investment Portfolio

This excerpt taken from the CLFC 10-Q filed Oct 26, 2006.

Investment Portfolio

The following table summarizes the amortized cost, fair value and distribution of the Company’s investment securities as of the dates indicated:

This excerpt taken from the CLFC 10-Q filed Jul 26, 2006.

Investment Portfolio

 

The following table summarizes the amortized cost, fair value and distribution of the Company’s investment securities as of the dates indicated:

 

This excerpt taken from the CLFC 10-Q filed May 5, 2006.

Investment Portfolio

 

The following table summarizes the amortized cost, fair value and distribution of the Company’s investment securities as of the dates indicated:

 

This excerpt taken from the CLFC 10-K filed Mar 16, 2006.

Investment Portfolio

 

The Company’s investment securities portfolio is classified into two categories: Held-to-Maturity or Available-for-Sale. Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities (SFAS No. 115) also provides for a trading portfolio classification, but the Company had no investment securities in this category for any of the reported periods. The Company classifies securities that it has the ability and intent to hold to maturity as held-to-maturity securities, to be sold only in the event of concerns with an issuer’s credit worthiness, a change in tax law that eliminates their tax-exempt status or other infrequent situations as permitted by SFAS No. 115. All other securities are classified as available-for-sale. The securities classified as held-to-maturity are presented at net amortized cost and available-for-sale securities are carried at their estimated fair values.

 

The main objectives of the Company’s investment portfolio are to: 1) provide a sufficient level of liquidity; 2) provide a source of pledged assets for securing State of California deposits and borrowed funds; 3) provide a large base of assets, the maturity and interest rate characteristics of which can be changed more readily than the loan portfolio to better match changes in the deposit base and other funding sources; 4) provide an alternative to loans as interest-earning assets when loan demand is weak; and 5) enhance the Company’s tax position by providing partially tax-exempt income.

 

As of December 31, 2005, investment securities totaled $237.1 million or 14% of total assets, compared to $168.4 million or 13% of total assets at December 31, 2004. The increase in the investment portfolio was mainly due to the purchase of $209.4 million available-for-sale securities partially offset by proceeds from the principal repayment, maturity or called securities of $133.8 million.

 

As of December 31, 2005, available-for-sale securities totaled $226.0 million, compared to $157.0 million as of December 31, 2004. Available-for-sale securities as a percentage of total assets increased to 14% as of December 31, 2005 from 12% as of December 31, 2004, primarily due to new purchases of adjustable mortgage backed and government agency securities. Held-to-maturity securities decreased slightly to $11.1 million as of December 31, 2005, from $11.4 million as of December 31, 2004. This decrease was due to the matured and called securities, and increased principal payments on mortgage backed securities. The composition of available-for-sale and held-to-maturity securities was 95% and 5% as of December 31, 2005, compared to 93% and 7% as of December 31, 2004, respectively. For the year ended December 31, 2005, the yield on the average investment portfolio was 3.53%, representing an increase of 25 basis points as compared to 3.28% for the same period of 2004. The distribution in available-for-sale portfolio changed in 2005, contributed by additional purchases of mortgage-backed securities and U.S government agency and U.S. Government sponsored enterprise securities. The Company used cash flows generated from prepayments in mortgage-backed and collateralized mortgage obligation proceeds to purchase agency and U.S. Government sponsored enterprise securities and adjustable mortgage-backed securities. Part of the proceeds was also used to fund higher yielding loans.

 

The average balance of taxable investment securities increased by 53% to $168.1 million for the year ended December 31, 2005, compared to $109.7 million for the previous year. The annualized average yield increased 152 basis points to 4.79% for the year ended December 31, 2005, compared to 3.27% for the previous year. The increase was largely attributable to an overall general increase in interest rates for the year.

 

The average balance of tax-advantaged securities was $11.6 million and $16.6 million for the years ended December 31, 2005 and 2004, respectively. The tax-equivalent yield on these same types of securities for the year ended December 31, 2005 was 4.14% compared to 4.85% for the previous year.

 

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The following table summarizes the amortized cost, fair value, and distribution of the Company’s investment securities as of the dates indicated:

 

This excerpt taken from the CLFC 10-Q filed Nov 21, 2005.

Investment Portfolio

 

As of September 30, 2005, investment securities totaled $201.7 million or 13% of total assets, compared to $168.4 million or 13% of total assets as of December 31, 2004. The increase of $32.6 million in the investment portfolio was due to: $137.1 million of combined purchases of U.S. government agency and U.S. government sponsored enterprise securities, U.S. government sponsored enterprise mortgage-backed securities and municipal securities. These purchases were partially offset by: (i) $73.0 million in available-for-sale U.S. Treasury, U.S. government sponsored enterprise securities and corporate bonds, which matured during the first nine months, (ii) $13.5 million in available-for-sale U.S. government sponsored enterprise preferred stocks and $1.0 million corporate bonds sold during the period, (iii) $5.0 million of U.S. government agency and U.S. government sponsored enterprise securities called, and (iv) principal payments of $18.5 million made on mortgage-backed securities.

 

As of September 30, 2005, available-for-sale securities totaled $190.1 million, compared to $157.0 million as of December 31, 2004. Available-for-sale securities as a percentage of total assets remained unchanged at 12% at September 30, 2005, and December 31, 2004. Held-to-maturity securities slightly decreased to $11.0 million as of September 30, 2005, compared to $11.4 million as of December 31, 2004. This decrease was due to the principal payments on mortgage backed securities. The composition of available-for-sale and held-to-maturity securities was 95% and 5% as of September 30, 2005, compared to 93% and 7% as of December 31, 2004, respectively. For the three months and nine months ended September 30, 2005, the yield on the average investment portfolio was 3.54% 3.46%, respectively, as compared to 3.10% and 3.25% respectively, for the same

 

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periods of 2004. This increase was mainly due to market rate hikes and replacing matured and call securities with higher yielding new securities. This increase partially offset by selling $6.5 million of the Freddie Mac preferred stocks and reversing the accrued dividends associated with these securities. The Company purchased additional mortgage-backed securities and U.S government agency and U.S. Government sponsored enterprise securities during the first nine months of 2005. The Company used cash flows generated from prepayments in mortgage-backed securities to purchase U.S. government agency and U.S. Government sponsored enterprise securities and adjustable mortgage-backed securities. Part of the proceeds was also used to fund higher yielding loans.

 

As a result of additional purchases, the average balance of taxable investment securities increased by 58% to $162.3 million for the nine months ended September 30, 2005, compared to $102.6 million for the same period of previous year. The annualized average yield increased 28 basis points to 3.52% for the nine months ended September 30, 2005, compared to 3.24% for the previous year.

 

The average balance of tax-advantaged securities was $11.5 million and $17.0 million for the nine months ended September 30, 2005 and 2004, respectively. The average yield on tax-advantaged securities for the year ended September 30, 2005 was 2.67% compared to 3.37% for the same period last year. This decrease was mainly due to a decrease in the yield on U.S. Government sponsored enterprise preferred stock. The tax-equivalent yield on these same types of securities for the nine months ended September 30, 2005 was 3.99% compared to 4.85% for the same period last year. The decrease in the yield on the tax advantage securities was primarily due to lower yielding U.S. Government sponsored enterprise preferred stock.

 

The following table summarizes the amortized cost, fair value and distribution of the Company’s investment securities as of the dates indicated:

 

This excerpt taken from the CLFC 10-Q filed Nov 21, 2005.

Investment Portfolio

 

As of June 30, 2005, investment securities totaled $199.4 million or 13% of total assets, compared to $168.4 million or 13% of total assets as of December 31, 2004. The increase of $31.0 million in the investment portfolio was due to: $96.7 million of purchases of U.S. government agency and U.S. government sponsored enterprise securities and U.S. government sponsored enterprise mortgage-backed securities. These purchases were partially offset by: (i) $42.5 million in available-for-sale U.S. Treasury, U.S. government sponsored enterprise securities and corporate bonds, which matured during the first half, (ii) $7.5 million in available-for-sale U.S. government sponsored enterprise preferred stocks and $1.0 million corporate bonds sold during the period, (iii) $5.0 million of U.S. government agency and U.S. government sponsored enterprise securities called, and (iv) a principal payment of $6.8 million made on mortgage-backed securities.

 

As of June 30, 2005, available-for-sale securities totaled $189.1 million, compared to $157.0 million as of December 31, 2004. Available-for-sale securities as a percentage of total assets slightly decreased 12% at June 30, 2005, as compared to 13% as of December 31, 2004. Held-to-maturity securities decreased to $10.2 million as of June 30, 2005, compared to $11.4 million as of December 31, 2004. This decrease was due to the principal payments on mortgage backed securities. The composition of available-for-sale and held-to-maturity securities was 95% and 5% as of June 30, 2005, compared to 93% and 7% as of December 31, 2004, respectively. For the three months and six months ended June 30, 2005, the yield on the average investment portfolio was 3.49% 3.42%, respectively, as compared to 3.16% and 3.34% respectively, for the same periods of 2004. This increase was mainly due to market rate hikes and replacing matured and call securities with higher yielding new securities This increase was partially offset by selling $6.5 million of the Freddie Mac preferred stocks and reversing the accrued dividends associated with these securities. The Company purchased additional mortgage-backed securities and U.S government agency and U.S. Government sponsored enterprise securities during the first half of 2005. The Company used cash flows generated from prepayments in mortgage-backed securities to purchase U.S. government agency and U.S. Government sponsored enterprise securities and adjustable mortgage-backed securities. Part of the proceeds was also used to fund higher yielding loans.

 

As a result of additional purchases, the average balance of taxable investment securities increased by 56% to $156.2 million for the six months ended June 30, 2005, compared to $100.4 million for the same period of previous year. The annualized average yield increased 18 basis points to 3.49% for the six months ended June 30, 2005, compared to 3.31% for the previous year.

 

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The average balance of tax-advantaged securities was $11.9 million and $17.4 million for the six months ended June 30, 2005 and 2004, respectively. The average yield on tax-advantaged securities for the year ended June 30, 2005 was 2.49% compared to 3.50% for the same period last year. This decrease was mainly due to decrease yield on U.S. Government sponsored enterprise preferred stock. The tax-equivalent yield on these same types of securities for the six months ended June 30, 2005 was 3.72% compared to 5.03% for the same period last year. The decrease in yield on the tax advantage securities was primarily due to lower yielding U.S. Government sponsored enterprise preferred stock.

 

The following table summarizes the amortized cost, fair value and distribution of the Company’s investment securities as of the dates indicated:

 

This excerpt taken from the CLFC 10-Q filed Nov 21, 2005.

Investment Portfolio

 

As of March 31, 2005, investment securities totaled $178.7 million or 13% of total assets, compared to $168.4 million or 13% of total assets as of December 31, 2004. The increase in the investment portfolio was due to: $42.0 million of purchases of U.S. government agency and U.S. government sponsored enterprise securities and U.S. government sponsored enterprise mortgage-backed securities. These purchases were partially offset by: (i) $20.0 million in available-for-sale U.S. government sponsored enterprise securities, which matured during the quarter, (ii) $7.5 million in available-for-sale U.S. government sponsored enterprise preferred stocks sold during the period, and (iii) a principal payment of $4.7 million made on mortgage-backed securities.

 

As of March 31, 2005, available-for-sale securities totaled $167.8 million, compared to $157.0 million as of December 31, 2004. Available-for-sale securities as a percentage of total assets remained unchanged at 12% as of March 31, 2005 and December 31, 2004. Held-to-maturity securities decreased to $10.9 million as of March 31, 2005, compared to $11.4 million as of December 31, 2004. This decrease was due to the principal payments on mortgage backed securities. The composition of available-for-sale and held-to-maturity securities was 94% and 6% as of March 31, 2005, compared to 93% and 7% as of December 31, 2004, respectively. For the three months ended March 31, 2005, the yield on the average investment portfolio was 3.34% representing a decrease of 16 basis points as compared to 3.50% for the same period of 2004. This decrease was mainly due to the Company selling $6.5 million of the Freddie Mac preferred stocks and reversing the accrued dividends associated with these securities. The Company purchased additional mortgage-backed securities and U.S government agency and U.S. Government sponsored enterprise securities during the first quarter of 2005. The Company used cash flows generated from prepayments in mortgage-backed securities to purchase U.S. government agency and U.S. Government sponsored enterprise securities and adjustable mortgage-backed securities. Part of the proceeds was also used to fund higher yielding loans.

 

The average balance of taxable investment securities increased by 43% to $150.3 million for the three months ended March 31, 2005, compared to $105.2 million for the same period of previous year. The annualized average yield increased 3 basis points to 3.46% for the three months ended March 31, 2005, compared to 3.43% for the previous year.

 

The average balance of tax-advantaged securities was $13.8 million and $17.9 million for the three months ended March 31, 2005 and 2004, respectively. The average yield on tax-advantaged securities for the year ended March 31, 2005 was 2.09% compared to 3.87% for the same period last year. This decrease was mainly due to

 

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decrease yield on U.S. Government sponsored enterprise preferred stock. The tax-equivalent yield on these same types of securities for the three months ended March 31, 2005 was 3.12% compared to 5.54% for the same period last year. The decrease in yield on the tax advantage securities was primarily due to lower yielding U.S. Government sponsored enterprise preferred stock.

 

The following table summarizes the amortized cost, fair value and distribution of the Company’s investment securities as of the dates indicated:

 

This excerpt taken from the CLFC 10-K filed Nov 18, 2005.

Investment Portfolio

 

The Company’s investment securities portfolio are classified into two categories: Held-to-Maturity or Available-for-Sale. Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities (SFAS No. 115) also provides for a trading portfolio classification, but the Company had no investment securities in this category for any of the reported periods. The Company classifies securities that it has the ability and intent to hold to maturity as held-to-maturity securities, to be sold only in the event of concerns with an issuer’s credit worthiness, a change in tax law that eliminates

their tax-exempt status or other infrequent situations as permitted by SFAS No. 115. All other securities are classified as available-for-sale. The securities classified as held-to-maturity are presented at net amortized cost and available-for-sale securities are carried at their estimated fair values.

 

The main objectives of the Company’s investment portfolio are to: 1) provide a sufficient level of liquidity; 2) provide a source of pledged assets for securing State of California deposits and borrowed funds; 3) provide a large base of assets, the maturity and interest rate characteristics of which can be changed more readily than the loan portfolio to better match changes in the deposit base and other funding sources; 4) provide an alternative to loans as interest-earning assets when loan demand is weak; and 5) enhance the Company’s tax position by providing partially tax-exempt income.

 

As of December 31, 2004, investment securities totaled $168.4 million or 13% of total assets, compared to $125.5 million or 12% of total assets at December 31, 2003. The increase in the investment portfolio was mainly due to the purchase of $88.9 million available-for-sale securities. This increase for the twelve months ended December 31, 2004 was partially offset by (i) $1.7 million held–to-maturity securities matured or called during the period, (ii) $14.7 million of available for sale securities called, (iii) $4.6 million of available for sale sold, (iv)

 

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principal payments of $22.3 million on mortgage-backed securities, and (v) $2.3 million of impairment losses recorded.

 

As of December 31, 2004, available-for-sale securities totaled $157.0 million, compared to $110.1 million as of December 31, 2003. Available-for-sale securities as a percentage of total assets increased to 12% as of December 31, 2004 from 11% as of December 31, 2003, primarily due to new purchases of adjustable mortgage backed and government agency securities. Held-to-maturity securities decreased to $11.4 million as of December 31, 2004, compared to $15.4 million as of December 31, 2003. This decrease was due to the matured and called securities, and increased principal payments on mortgage backed securities. The composition of available-for-sale and held-to-maturity securities was 93% and 7% as of December 31, 2004, compared to 88% and 12% as of December 31, 2003, respectively. For the year ended December 31, 2004, the yield on the average investment portfolio was 3.28% representing a decrease of 12 basis points as compared to 3.40% for the same period of 2003. The distribution in available-for-sale portfolio changed in 2004, contributed by additional purchases of mortgage-backed securities and U.S government agency and U.S. Government sponsored enterprise securities. The Company used cash flows generated from prepayments in mortgage-backed and collateralized mortgage obligation proceeds to purchase agency and U.S. Government sponsored enterprise securities and adjustable mortgage-backed securities. Part of the proceeds was also used to fund higher yielding loans.

 

The average balance of taxable investment securities decreased by 8% to $109.7 million for the year ended December 31, 2004, compared to $118.9 million for the previous year. The annualized average yield declined 6 basis points to 3.27% for the year ended December 31, 2004, compared to 3.33% for the previous year. The 6 basis point decrease in yield was primarily due to higher prepayments recorded on agency mortgage-backed securities due to the low rate environment.

 

The average balance of tax-advantaged securities was $16.6 million and $18.7 million for the years ended December 31, 2004 and 2003, respectively. The average yield on tax-advantaged securities for the year ended December 31, 2004 was 3.37% compared to 3.91% for the same periods last year. The tax-equivalent yield on these same types of securities for the year ended December 31, 2004 was 4.85% compared to 5.60% for the previous year. The decrease in yield on the tax advantage securities was primarily due to lower yielding U.S. Government sponsored enterprise preferred stock.

 

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The following table summarizes the amortized cost, fair value, and distribution of the Company’s investment securities as of the dates indicated:

 

This excerpt taken from the CLFC 10-Q filed Nov 15, 2005.

Investment Portfolio

 

As of September 30, 2005, investment securities totaled $201.7 million or 13% of total assets, compared to $168.4 million or 13% of total assets as of December 31, 2004. The increase of $32.6 million in the investment portfolio was due to: $137.1 million of combined purchases of U.S. government agency and U.S. government sponsored enterprise securities, U.S. government sponsored enterprise mortgage-backed securities and municipal securities. These purchases were partially offset by: (i) $73.0 million in available-for-sale U.S. Treasury, U.S. government sponsored enterprise securities and corporate bonds, which matured during the first nine months, (ii) $13.5 million in available-for-sale U.S. government sponsored enterprise preferred stocks and $1.0 million corporate bonds sold during the period, (iii) $5.0 million of U.S. government agency and U.S. government sponsored enterprise securities called, and (iv) principal payments of $18.5 million made on mortgage-backed securities.

 

As of September 30, 2005, available-for-sale securities totaled $190.1 million, compared to $157.0 million as of December 31, 2004. Available-for-sale securities as a percentage of total assets remained unchanged at 12% at September 30, 2005, and December 31, 2004. Held-to-maturity securities slightly decreased to $11.0 million as of September 30, 2005, compared to $11.4 million as of December 31, 2004. This decrease was due to the principal payments on mortgage backed securities. The composition of available-for-sale and held-to-maturity securities was 95% and 5% as of September 30, 2005, compared to 93% and 7% as of December 31, 2004, respectively. For the three months and nine months ended September 30, 2005, the yield on the average investment portfolio was 3.54% 3.46%, respectively, as compared to 3.10% and 3.25% respectively, for the same

 

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periods of 2004. This increase was mainly due to market rate hikes and replacing matured and call securities with higher yielding new securities. This increase partially offset by selling $6.5 million of the Freddie Mac preferred stocks and reversing the accrued dividends associated with these securities. The Company purchased additional mortgage-backed securities and U.S government agency and U.S. Government sponsored enterprise securities during the first nine months of 2005. The Company used cash flows generated from prepayments in mortgage-backed securities to purchase U.S. government agency and U.S. Government sponsored enterprise securities and adjustable mortgage-backed securities. Part of the proceeds was also used to fund higher yielding loans.

 

As a result of additional purchases, the average balance of taxable investment securities increased by 58% to $162.3 million for the nine months ended September 30, 2005, compared to $102.6 million for the same period of previous year. The annualized average yield increased 28 basis points to 3.52% for the nine months ended September 30, 2005, compared to 3.24% for the previous year.

 

The average balance of tax-advantaged securities was $11.5 million and $17.0 million for the nine months ended September 30, 2005 and 2004, respectively. The average yield on tax-advantaged securities for the year ended September 30, 2005 was 2.67% compared to 3.37% for the same period last year. This decrease was mainly due to a decrease in the yield on U.S. Government sponsored enterprise preferred stock. The tax-equivalent yield on these same types of securities for the nine months ended September 30, 2005 was 3.99% compared to 4.85% for the same period last year. The decrease in the yield on the tax advantage securities was primarily due to lower yielding U.S. Government sponsored enterprise preferred stock.

 

The following table summarizes the amortized cost, fair value and distribution of the Company’s investment securities as of the dates indicated:

 

This excerpt taken from the CLFC 10-Q filed Aug 15, 2005.

Investment Portfolio

 

As of June 30, 2005, investment securities totaled $199.4 million or 13% of total assets, compared to $168.4 million or 13% of total assets as of December 31, 2004. The increase of $31.0 million in the investment portfolio was due to: $96.7 million of purchases of U.S. government agency and U.S. government sponsored enterprise securities and U.S. government sponsored enterprise mortgage-backed securities. These purchases were partially offset by: (i) $42.5 million in available-for-sale U.S. Treasury, U.S. government sponsored enterprise securities and corporate bonds, which matured during the first half, (ii) $7.5 million in available-for-sale U.S. government sponsored enterprise preferred stocks and $1.0 million corporate bonds sold during the period, (iii) 5.0 million of $ U.S. government agency and U.S. government sponsored enterprise securities called, and (iv) a principal payment of $6.8 million made on mortgage-backed securities.

 

As of June 30, 2005, available-for-sale securities totaled $189.1 million, compared to $157.0 million as of December 31, 2004. Available-for-sale securities as a percentage of total assets slightly increased to 13% at June 30, 2005, as compared to 13% as of December 31, 2004. Held-to-maturity securities decreased to $10.2 million as of June 30, 2005, compared to $11.4 million as of December 31, 2004. This decrease was due to the principal payments on mortgage backed securities. The composition of available-for-sale and held-to-maturity securities was 95% and 5% as of June 30, 2005, compared to 93% and 7% as of December 31, 2004, respectively. For the three months and six months ended June 30, 2005, the yield on the average investment portfolio was 3.49% 3.42%, respectively, as compared to 3.16% and 3.34% respectively, for the same periods of 2004. This increase was mainly due to market rate hikes and replacing matured and call securities with higher yielding new securities This increase partially offset by selling $6.5 million of the Freddie Mac preferred stocks and reversing the accrued dividends associated with these securities. The Company purchased additional mortgage-backed securities and U.S government agency and U.S. Government sponsored enterprise securities during the first half of 2005. The Company used cash flows generated from prepayments in mortgage-backed securities to purchase U.S. government agency and U.S. Government sponsored enterprise securities and adjustable mortgage-backed securities. Part of the proceeds was also used to fund higher yielding loans.

 

As a result of additional purchases, the average balance of taxable investment securities increased by 56% to $156.2 million for the six months ended June 30, 2005, compared to $100.4 million for the same period of previous year. The annualized average yield increased 18 basis points to 3.49% for the six months ended June 30, 2005, compared to 3.31% for the previous year.

 

The average balance of tax-advantaged securities was $11.9 million and $17.4 million for the six months ended June 30, 2005 and 2004, respectively. The average yield on tax-advantaged securities for the year ended June 30, 2005 was 2.49% compared to 3.50% for the same period last year. This decrease was mainly due to decrease yield on U.S. Government sponsored enterprise preferred stock. The tax-equivalent yield on these same types of securities for the six months ended June 30, 2005 was 3.72%

 

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compared to 5.03% for the same period last year. The decrease in yield on the tax advantage securities was primarily due to lower yielding U.S. Government sponsored enterprise preferred stock.

 

The following table summarizes the amortized cost, fair value and distribution of the Company’s investment securities as of the dates indicated:

 

This excerpt taken from the CLFC 10-Q filed May 10, 2005.

Investment Portfolio

 

As of March 31, 2005, investment securities totaled $178.7 million or 13% of total assets, compared to $168.4 million or 13% of total assets as of December 31, 2004. The increase in the investment portfolio was due to: $42.0 million of purchases of U.S. government agency and U.S. government sponsored enterprise securities and U.S. government sponsored enterprise mortgage-backed securities. These purchases were partially offset by: (i) $20.0 million in available-for-sale U.S. government sponsored enterprise securities, which matured during the quarter, (ii) $7.5 million in available-for-sale U.S. government sponsored enterprise preferred stocks sold during the period, and (iii) a principal payment of $4.7 million made on mortgage-backed securities.

 

As of March 31, 2005, available-for-sale securities totaled $167.8 million, compared to $157.0 million as of December 31, 2004. Available-for-sale securities as a percentage of total assets remained unchanged at 12% as of March 31, 2005 and December 31, 2004. Held-to-maturity securities decreased to $10.9 million as of March 31, 2005, compared to $11.4 million as of December 31, 2004. This decrease was due to the principal payments on mortgage backed securities. The composition of available-for-sale and held-to-maturity securities was 94% and 6% as of March 31, 2005, compared to 93% and 7% as of December 31, 2004, respectively. For the three months ended March 31, 2005, the yield on the average investment portfolio was 3.34% representing a decrease of 16 basis points as compared to 3.50% for the same period of 2004. This decrease was mainly due to the Company selling $6.5 million of the Freddie Mac preferred stocks and reversing the accrued dividends associated with these securities. The Company purchased additional mortgage-backed securities and U.S government agency and U.S. Government sponsored enterprise securities during the first quarter of 2005. The Company used cash flows generated from prepayments in mortgage-backed securities to purchase U.S. government agency and U.S. Government sponsored enterprise securities and adjustable mortgage-backed securities. Part of the proceeds was also used to fund higher yielding loans.

 

The average balance of taxable investment securities increased by 43% to $150.3 million for the three months ended March 31, 2005, compared to $105.2 million for the same period of previous year. The annualized average yield increased 3 basis points to 3.46% for the three months ended March 31, 2005, compared to 3.43% for the previous year.

 

The average balance of tax-advantaged securities was $13.8 million and $17.9 million for the three months ended March 31, 2005 and 2004, respectively. The average yield on tax-advantaged securities for the year ended March 31, 2005 was 2.09% compared to 3.87% for the same period last year. This decrease was mainly due to decrease yield on U.S. Government sponsored enterprise preferred stock. The tax-equivalent yield on these same types of securities for the three months ended March 31, 2005 was 3.12% compared to 5.54% for the same period last year. The decrease in yield on the tax advantage securities was primarily due to lower yielding U.S. Government sponsored enterprise preferred stock.

 

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The following table summarizes the amortized cost, fair value and distribution of the Company’s investment securities as of the dates indicated:

 

This excerpt taken from the CLFC 10-K filed Mar 31, 2005.

Investment Portfolio

 

The Company’s investment securities portfolio are classified into two categories: Held-to-Maturity or Available-for-Sale. Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in

 

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Debt and Equity Securities (SFAS No.115) also provides for a trading portfolio classification, but the Company had no investment securities in this category for any of the reported periods. The Company classifies securities that it has the ability and intent to hold to maturity as held-to-maturity securities, to be sold only in the event of concerns with an issuer’s credit worthiness, a change in tax law that eliminates their tax-exempt status or other infrequent situations as permitted by SFAS No. 115. All other securities are classified as available-for-sale. The securities classified as held-to-maturity are presented at net amortized cost and available-for-sale securities are carried at their estimated fair values.

 

The main objectives of the Company’s investment portfolio are to: 1) provide a sufficient level of liquidity; 2) provide a source of pledged assets for securing State of California deposits and borrowed funds; 3) provide a large base of assets, the maturity and interest rate characteristics of which can be changed more readily than the loan portfolio to better match changes in the deposit base and other funding sources; 4) provide an alternative to loans as interest-earning assets when loan demand is weak; and 5) enhance the Company’s tax position by providing partially tax-exempt income.

 

As of December 31, 2004, investment securities totaled $168.4 million or 13% of total assets, compared to $125.5 million or 12% of total assets at December 31, 2003. The increase in the investment portfolio was mainly due to the purchase of $88.9 million available-for-sale securities. This increase for the twelve months ended December 31, 2004 was partially offset by (i) $1.7 million held–to-maturity securities matured or called during the period, (ii) $14.7 million of available for sale securities called, (iii) $4.6 million of available for sale sold, (iv) principal payments of $22.3 million on mortgage-backed securities, and (v) $2.3 million of impairment losses recorded.

 

As of December 31, 2004, available-for-sale securities totaled $157.0 million, compared to $110.1 million as of December 31, 2003. Available-for-sale securities as a percentage of total assets increased to 12% as of December 31, 2004 from 11% as of December 31, 2003, primarily due to new purchases of adjustable mortgage backed and government agency securities. Held-to-maturity securities decreased to $11.4 million as of December 31, 2004, compared to $15.4 million as of December 31, 2003. This decrease was due to the matured and called securities, and increased principal payments on mortgage backed securities. The composition of available-for-sale and held-to-maturity securities was 93% and 7% as of December 31, 2004, compared to 88% and 12% as of December 31, 2003, respectively. For the year ended December 31, 2004, the yield on the average investment portfolio was 3.28% representing a decrease of 12 basis points as compared to 3.40% for the same period of 2003. The distribution in available-for-sale portfolio changed in 2004, contributed by additional purchases of mortgage-backed securities and U.S government agency and U.S. Government sponsored enterprise securities. The Company used cash flows generated from prepayments in mortgage-backed and collateralized mortgage obligation proceeds to purchase agency and U.S. Government sponsored enterprise securities and adjustable mortgage-backed securities. Part of the proceeds was also used to fund higher yielding loans.

 

The average balance of taxable investment securities decreased by 8% to $109.7 million for the year ended December 31, 2004, compared to $118.9 million for the previous year. The annualized average yield declined 6 basis points to 3.27% for the year ended December 31, 2004, compared to 3.33% for the previous year. The 6 basis point decrease in yield was primarily due to higher prepayments recorded on agency mortgage-backed securities due to the low rate environment.

 

The average balance of tax-advantaged securities was $16.6 million and $18.7 million for the years ended December 31, 2004 and 2003, respectively. The average yield on tax-advantaged securities for the year ended December 31, 2004 was 3.37% compared to 3.91% for the same periods last year. The tax-equivalent yield on these same types of securities for the year ended December 31, 2004 was 4.85% compared to 5.60% for the previous year. The decrease in yield on the tax advantage securities was primarily due to lower yielding U.S. Government sponsored enterprise preferred stock.

 

55


The following table summarizes the amortized cost, fair value, and distribution of the Company’s investment securities as of the dates indicated:

 

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