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Held to Maturity Debt Securities | 12 Months Ended
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Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract] |
Held to Maturity Debt Securities | Held to Maturity Debt Securities On January 1, 2020, the Company adopted CECL which replaces the incurred loss methodology with an expected loss methodology. The Company recorded a $70,000 increase to the allowance for credit losses on held to maturity debt securities with a corresponding cumulative effect adjustment to decrease retained earnings by $52,000, net of income taxes. (See Adoption of CECL table below for additional detail.) Management measures expected credit losses on held to maturity debt securities on a collective basis by security type. Management classifies the held to maturity debt securities portfolio into the following security types: •Agency obligations; •Mortgage-backed securities; •State and municipal obligations; and •Corporate obligations. All of the agency obligations held by the Company are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The majority of the state and municipal, and corporate obligations carry no lower than A ratings from the rating agencies at December 31, 2020 and the Company had one security rated with a triple-B by Moody’s Investors Service. The Company adopted CECL using the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after the effective date of CECL. Held to maturity debt securities at December 31, 2020 and 2019 are summarized as follows (in thousands):
| 2020
| Amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Allowance for credit losses |  | Fair value
Agency obligations | $ | 7,600 |  |  | 6 |  |  | (5) |  |  | — |  |  | 7,601 |
Mortgage-backed securities | 62 |  |  | 2 |  |  | — |  |  | — |  |  | 64 |
State and municipal obligations | 433,655 |  |  | 21,442 |  |  | (58) |  |  | (66) |  |  | 454,973 |
Corporate obligations | 9,726 |  |  | 101 |  |  | (2) |  |  | (12) |  |  | 9,813 |
| $ | 451,043 |  |  | 21,551 |  |  | (65) |  |  | (78) |  |  | 472,451 |
At December 31, 2020, total amortized cost, net of allowance for credit losses totaled $451.0 million.
| 2019
| Amortized cost |  | Gross unrealized gains |  | Gross unrealized losses |  | Allowance for credit losses |  | Fair value
Agency obligations | $ | 6,599 |  |  | 11 |  |  | (9) |  |  | — |  |  | 6,601 |
Mortgage-backed securities | 118 |  |  | 4 |  |  | — |  |  | — |  |  | 122 |
State and municipal obligations | 437,074 |  |  | 14,394 |  |  | (115) |  |  | — |  |  | 451,353 |
Corporate obligations | 9,838 |  |  | 58 |  |  | (6) |  |  | — |  |  | 9,890 |
| $ | 453,629 |  |  | 14,467 |  |  | (130) |  |  | — |  |  | 467,966 |
The Company generally purchases securities for long-term investment purposes, and differences between carrying and fair values may fluctuate during the investment period. Held to maturity debt securities having a carrying value of $416.1 million and $428.0 million at December 31, 2020 and 2019, respectively, were pledged to secure municipal deposits. The amortized cost and fair value of held to maturity debt securities at December 31, 2020 by contractual maturity are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.
| 2020
| Amortized cost |  | Fair value
Due in one year or less | $ | 21,623 |  |  | 21,736 |
Due after one year through five years | 133,869 |  |  | 137,978 |
Due after five years through ten years | 216,671 |  |  | 229,902 |
Due after ten years | 78,818 |  |  | 82,849 |
| $ | 450,981 |  |  | 472,465 |
Mortgage-backed securities totaling $62,000 at amortized cost and $64,000 at fair value are excluded from the table above as their expected lives are anticipated to be shorter than the contractual maturity date due to principal prepayments. Additionally, the allowance for credit losses totaling $78,000 is excluded from the table above. During 2020, the Company recognized gains of $81,000 and no losses related to calls on securities in the held to maturity debt securities portfolio, with total proceeds from the calls totaling $49.3 million. There were no sales of securities from the held to maturity debt securities portfolio for the year ended December 31, 2020. For 2019, the Company recognized gains of $72,000 and no losses related to calls on securities in the held to maturity debt securities portfolio, with total proceeds from the calls totaling $33.9 million. There were no sales of securities from the held to maturity debt securities portfolio for the year ended December 31, 2019. For the 2018 period, the Company recognized gains of $10,000 and losses of $1,000 related to calls on certain securities in the held to maturity debt securities portfolio, with total proceeds from the calls totaling $32.0 million. There were no sales of securities from the held to maturity debt securities portfolio for the year ended December 31, 2018. The following table illustrates the impact of the January 1, 2020 adoption of CECL on held to maturity debt securities (in thousands):
|  | January 1, 2020
|  | As reported under CECL |  | Prior to CECL |  | Impact of CECL adoption
Held to Maturity Debt Securities |  |  |  |  |  |
Allowance for credit losses on corporate securities |  | $ | 6 |  |  | — |  |  | 6 |
Allowance for credit losses on municipal securities |  | 64 |  |  | — |  |  | 64 |
Allowance for credit losses on held to maturity debt securities |  | $ | 70 |  |  | — |  |  | 70 |
The following tables represent the Company's disclosure on held to maturity debt securities in an unrealized loss position (in thousands):
| December 31, 2020 Unrealized Losses
| Less than 12 months |  | 12 months or longer |  | Total
| Fair value |  | Gross unrealized losses |  | Fair value |  | Gross unrealized losses |  | Fair value |  | Gross unrealized losses
Agency obligations | $ | 1,995 |  |  | (5) |  |  | — |  |  | — |  |  | 1,995 |  |  | (5) |
State and municipal obligations | 4,846 |  |  | (41) |  |  | 406 |  |  | (17) |  |  | 5,252 |  |  | (58) |
Corporate obligations | 786 |  |  | (2) |  |  | — |  |  | — |  |  | 786 |  |  | (2) |
| $ | 7,627 |  |  | (48) |  |  | 406 |  |  | (17) |  |  | 8,033 |  |  | (65) |
| December 31, 2019 Unrealized Losses
| Less than 12 months |  | 12 months or longer |  | Total
| Fair value |  | Gross unrealized losses |  | Fair value |  | Gross unrealized losses |  | Fair value |  | Gross unrealized losses
Agency obligations | $ | 3,601 |  |  | (9) |  |  | — |  |  | — |  |  | 3,601 |  |  | (9) |
State and municipal obligations | 7,675 |  |  | (42) |  |  | 2,093 |  |  | (73) |  |  | 9,768 |  |  | (115) |
Corporate obligations | 3,254 |  |  | (6) |  |  | — |  |  | — |  |  | 3,254 |  |  | (6) |
| $ | 14,530 |  |  | (57) |  |  | 2,093 |  |  | (73) |  |  | 16,623 |  |  | (130) |
The number of securities in an unrealized loss position as of December 31, 2020 totaled 7, compared with 35 at December 31, 2019. The decrease in the number of securities in an unrealized loss position at December 31, 2020 was due to lower current market interest rates compared to rates at December 31, 2019. Credit Quality Indicators. The following table provides the amortized cost of held to maturity debt securities by credit rating as of December 31, 2020 (in thousands):
|  | December 31, 2020
Total Portfolio |  | AAA |  | AA |  | A |  | BBB |  | Not Rated |  | Total
Agency obligations |  | $ | 7,600 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 7,600 |
Mortgage-backed securities |  | 62 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 62 |
State and municipal obligations |  | 57,830 |  |  | 311,155 |  |  | 53,302 |  |  | 1,115 |  |  | 10,253 |  |  | 433,655 |
Corporate obligations |  | — |  |  | 3,255 |  |  | 6,446 |  |  | — |  |  | 25 |  |  | 9,726 |
|  | $ | 65,492 |  |  | 314,410 |  |  | 59,748 |  |  | 1,115 |  |  | 10,278 |  |  | 451,043 |
|  | December 31, 2019
Total Portfolio |  | AAA |  | AA |  | A |  | BBB |  | Not Rated |  | Total
Agency obligations |  | $ | 6,599 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 6,599 |
Mortgage-backed securities |  | 118 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 118 |
State and municipal obligations |  | 49,316 |  |  | 330,322 |  |  | 56,317 |  |  | 1,119 |  |  | — |  |  | 437,074 |
Corporate obligations |  | — |  |  | 3,128 |  |  | 6,335 |  |  | 350 |  |  | 25 |  |  | 9,838 |
|  | $ | 56,033 |  |  | 333,450 |  |  | 62,652 |  |  | 1,469 |  |  | 25 |  |  | 453,629 |
Credit quality indicators are metrics that provide information regarding the relative credit risk of debt securities. At December 31, 2020, the held to maturity debt securities portfolio was comprised of 15% rated AAA, 70% rated AA, 13% rated A, and less than 2% either below an A rating or not rated by Moody’s Investors Service or Standard and Poor’s. Securities not explicitly rated were grouped where possible under the credit rating of the issuer of the security. At December 31, 2020, the allowance for credit losses on held to maturity debt securities was $78,000, an increase from $70,000 at January 1, 2020, when the Company adopted CECL.

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