Marcus & Millichap, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Investments in Marketable Debt Securities, Available for Sale

Investments in Marketable Debt Securities, Available for Sale

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Investments in Marketable Debt Securities, Available for Sale

4.	Investments in Marketable Debt Securities, Available for Sale

Amortized cost, allowance for credit losses, gross unrealized gains/losses in accumulated other comprehensive income/loss and fair value of marketable debt securities,

available-for-sale,

by type of security consisted of the following (in thousands):


	September 30, 2021
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term investments:

U.S. treasuries	$	19,984	$	—	$	7	$	—		$	19,991
Corporate debt		96,868		—		43		—			96,911

	$	116,852	$	—	$	50	$	—		$	116,902

Long-term investments:
U.S. treasuries	$	86,893	$	—	$	190	$	(26	)	$	87,057
U.S. government sponsored entities		797		—		27		(2	)		822
Corporate debt		33,845		—		1,422		(33	)		35,234
Asset-backed securities (“ABS”) and other		7,253		—		141		(5	)		7,389

	$	128,788	$	—	$	1,780	$	(66	)	$	130,502


	December 31, 2020
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term investments:

U.S. treasuries	$	75,887	$	—	$	88	$	(5	)	$	75,970
U.S. government sponsored entities		32,439		—		8		—			32,447
Corporate debt		49,822		—		20		(1	)		49,841

	$	158,148	$	—	$	116	$	(6	)	$	158,258

Long-term investments:
U.S. treasuries	$	3,375	$	—	$	266	$	—		$	3,641
U.S. government sponsored entities		1,114		—		38		—			1,152
Corporate debt		34,183		—		2,137		(33	)		36,287
ABS and other		6,509		—		195		(11	)		6,693

	$	45,181	$	—	$	2,636	$	(44	)	$	47,773

The Company’s investments in marketable debt s

curities,

available-for-sale,

that have been in a continuous unrealized loss position, for which an allowance for credit losses has not been recorded, by type of security consisted of the following (in thousands):


	September 30, 2021
	Less than 12 months					12 months or greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. treasuries	$	44,428	$	(26	)	$	—	$	—		$	44,428	$	(26	)
U.S. government sponsored entities		123		(2	)		—		—			123		(2	)
Corporate debt		12,501		(33	)		—		—			12,501		(33	)
ABS and other		1,129		(4	)		221		(1	)		1,350		(5	)

	$	58,181	$	(65	)	$	221	$	(1	)	$	58,402	$	(66	)


	December 31, 2020
	Less than 12 months					12 months or greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses

U.S. treasuries	$	41,702	$	(5	)	$	—	$	—		$	41,702	$	(5	)
Corporate debt		29,810		(34	)		—		—			29,810		(34	)
ABS and other		546		(6	)		157		(5	)		703		(11	)

	$	72,058	$	(45	)	$	157	$	(5	)	$	72,215	$	(50	)

Gross realized gains and losses from the sales of the Company’s marketable debt securities,

available-for-sale,

consisted of the following (in thousands):


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021		2020			2021		2020

Gross realized gains (1)	$	68	$	97		$	78	$	229

Gross realized losses (1)	$	—	$	(34	)	$	—	$	(49	)

(1)	Recorded in other income (expense), net in the condensed consolidated statements of net and comprehensive income. The cost basis of securities sold were determined based on the specific identification method.

The Company invests its excess cash in a diversified portfolio of fixed and variable rate debt securities to meet current and future cash flow needs. All investments are made in accordance with the Company’s approved investment policy. As of September 30, 2021, the portfolio had an average credit rating of AA and weighted term to contractual maturity of 1.9 years, with 37 securities in the portfolio with an unrealized loss aggregating $66,000, or 0.1% of amortized cost, and a weighted average credit rating of AA+.

As of September 30, 2021, the Company performed an impairment analysis and determined an allowance for credit losses was not required. The Company determined that it did not have an intent to sell and it was not more likely than not that the Company would be required to sell any security based on its current liquidity position, or to ma

ntain compliance with its investment policy, specifically as it relates to minimum credit ratings. The Company evaluated the securities with an unrealized loss considering severity of loss, credit ratings, specific credit events during the period since acquisition, overall likelihood of default, market sector, potential impact from the current economic environment and a review of an issuer’s and securities’ liquidity and financial strength, as needed. The Company concluded that it would receive all scheduled interest and principal payments. The Company, therefore, determined qualitatively that the unrealized loss was related to changes in interest rates and other market factors and therefore no allowance for credit losses was required.

Amortized cost and fair value of marketable debt securities,

available-for-sale,

by contractual maturity consisted of the following (in thousands, except weighted average data):


	September 30, 2021				December 31, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value

Due in one year or less	$	116,852	$	116,902	$	158,148	$	158,258
Due after one year through five years		112,288		113,167		30,604		32,041
Due after five years through ten years		11,618		12,334		10,022		11,044
Due after ten years		4,882		5,001		4,555		4,688

	$	245,640	$	247,404	$	203,329	$	206,031

Weighted average contractual maturity				1.9 years				1.6 years

Actual maturities may differ from contractual maturities because certain issuers have the right to prepay certain obligations with or without prepayment penalties.