XML 23 R12.htm IDEA: XBRL DOCUMENT

Securities

9 Months Ended

Sep. 30, 2020

4.	Securities

The amortized cost, estimated fair value and unrealized gains (losses) of AFS securities are as follows:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
As of September 30, 2020
Federal agency	$	195,588	$	97	$	541	$	195,144
State & municipal		10,712		173		2		10,883
Mortgage-backed:
Government-sponsored enterprises		406,495		18,216		-		424,711
U.S. government agency securities		55,259		2,358		9		57,608
Collateralized mortgage obligations:
Government-sponsored enterprises		350,114		8,539		2		358,651
U.S. government agency securities		128,965		4,136		-		133,101
Corporate		17,500		331		4		17,827
Total AFS securities	$	1,164,633	$	33,850	$	558	$	1,197,925
As of December 31, 2019
Federal agency	$	34,998	$	3	$	243	$	34,758
State & municipal		2,533		-		20		2,513
Mortgage-backed:
Government-sponsored enterprises		453,614		4,982		239		458,357
U.S. government agency securities		44,758		667		156		45,269
Collateralized mortgage obligations:
Government-sponsored enterprises		328,499		1,949		467		329,981
U.S. government agency securities		104,152		718		408		104,462
Total AFS securities	$	968,554	$	8,319	$	1,533	$	975,340

There was no allowance for credit losses on AFS securities as of the quarter ending September 30, 2020.

The components of net realized gains (losses) on AFS securities are as follows. These amounts were reclassified out of accumulated other comprehensive income (loss) (“AOCI”) and into earnings.

	Three Months Ended September 30,
(In thousands)	2020		2019
Gross realized gains	$	-	$	20
Gross realized (losses)		-		-
Net AFS realized gains (losses)	$	-	$	20

	Nine Months Ended September 30,
(In thousands)	2020		2019
Gross realized gains	$	3	$	73
Gross realized (losses)		-		(152	)
Net AFS realized gains (losses)	$	3	$	(79	)

Included in net realized gains (losses) on AFS securities, the Company recorded gains from calls of approximately $3 thousand for the nine months ended September 30, 2020. There were no gains from calls for the three months ended September 30, 2020. The Company recorded gains from calls of approximately $20 thousand for the three months ended September 30, 2019 and $25 thousand for the nine months ended September 30, 2019.

The amortized cost, estimated fair value and unrealized gains (losses) of securities HTM are as follows:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
As of September 30, 2020
Federal agency	$	100,000	$	47	$	772	$	99,275
Mortgage-backed:
Government-sponsored enterprises		126,446		4,847		-		131,293
U.S. government agency securities		11,544		865		-		12,409
Collateralized mortgage obligations:
Government-sponsored enterprises		119,402		5,087		-		124,489
U.S. government agency securities		92,654		4,680		-		97,334
State & municipal		213,042		7,096		76		220,062
Total HTM securities	$	663,088	$	22,622	$	848	$	684,862
As of December 31, 2019
Mortgage-backed:
Government-sponsored enterprises	$	149,448	$	3,184	$	155	$	152,477
U.S. government agency securities		13,667		584		-		14,251
Collateralized mortgage obligations:
Government-sponsored enterprises		189,402		2,165		368		191,199
U.S. government agency securities		110,498		3,256		100		113,654
State & municipal		167,059		2,628		6		169,681
Total HTM securities	$	630,074	$	11,817	$	629	$	641,262

At September 30, 2020 and December 31, 2019, all of the mortgaged-backed HTM securities were comprised of U.S. government agency and Government-sponsored enterprises securities. There was no allowance for credit losses on HTM securities as of September 30, 2020.

Included in net realized gains (losses), the Company recorded gains from calls on HTM securities of approximately $11 thousand for the three months ended September 30, 2020 and $15 thousand for the nine months ended September 30, 2020. Included in net realized gains (losses), the Company recorded gains from calls on HTM securities of approximately $4 thousand for the three and nine month period ended September 30, 2019.

During the nine months ended September 30, 2020, the Company sold HTM securities with an amortized cost of $1.0 million and resulted in a realized loss of $1 thousand. Due to significant deterioration in the creditworthiness of the issuer of the HTM securities, the circumstances caused the Company to change its intent to hold the HTM securities sold to maturity, which did not affect the Company’s intent to hold the remainder of the HTM portfolio to maturity. There were no sales of HTM securities during the three and nine month periods ended September 30, 2019.

AFS and HTM securities with amortized costs totaling $1.4 billion at September 30, 2020 and $1.3 billion at December 31, 2019 were pledged to secure public deposits and for other purposes required or permitted by law. Additionally, at September 30, 2020 and December 31, 2019, AFS and HTM securities with an amortized cost of $227.4 million and $189.8 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

The following tables set forth information with regard to gains and losses on equity securities:

	Three Months Ended September 30,
(In thousands)	2020		2019
Net gains and (losses) recognized on equity securities	$	73	$	4,012
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		-		3,966
Unrealized gains and (losses) recognized on equity securities still held	$	73	$	46

	Nine Months Ended September 30,
(In thousands)	2020			2019
Net gains and (losses) recognized on equity securities	$	(565	)	$	4,099
Less: Net gains and (losses) recognized during the period on equity securities sold during the period		-			3,966
Unrealized gains and (losses) recognized on equity securities still held	$	(565	)	$	133

Included in the net realized gains and (losses) recognized on equity securities during the three and nine months ended September 30, 2019, the Company recorded a $4.0 million gain from the sale of Visa Class B common stock, which had no readily determinable fair value at the time of the sale. As of September 30, 2020 and December 31, 2019, the carrying value of equity securities without readily determinable fair values was $4.0 million. The Company performed a qualitative assessment to determine whether the investments were impaired and identified no areas of concern as of September 30, 2020 and 2019. There were no impairments, downward or upward adjustments recognized for equity securities without readily determinable fair values during the three and nine months ended September 30, 2020 and 2019.

The following tables set forth information with regard to contractual maturities of debt securities at September 30, 2020:

(In thousands)	Amortized Cost		Estimated Fair Value
AFS debt securities:
Within one year	$	706	$	731
From one to five years		20,281		21,010
From five to ten years		356,717		362,435
After ten years		786,929		813,749
Total AFS debt securities	$	1,164,633	$	1,197,925
HTM debt securities:
Within one year	$	17,239	$	17,257
From one to five years		60,391		61,713
From five to ten years		241,783		248,329
After ten years		343,675		357,563
Total HTM debt securities	$	663,088	$	684,862

Maturities of mortgage-backed, collateralized mortgage obligations and asset-backed securities are stated based on their estimated average lives. Actual maturities may differ from estimated average lives or contractual maturities because, in certain cases, borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Except for U.S. Government securities and Government-sponsored enterprises securities, there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders’ equity at September 30, 2020 and December 31, 2019.

The following table sets forth information with regard to investment securities with unrealized losses, for which an allowance for credit losses has not been recorded at September 30, 2020, segregated according to the length of time the securities had been in a continuous unrealized loss position:

	Less Than 12 Months							12 Months or Longer							Total
(In thousands)	Fair Value		Unrealized Losses			Number of Positions		Fair Value		Unrealized Losses			Number of Positions		Fair Value		Unrealized Losses			Number of Positions
As of September 30, 2020
AFS securities:
Federal agency	$	154,448	$	(541	)		10	$	-	$	-			-	$	154,448	$	(541	)		10
State & municipal		1,448		(2	)		1		-		-			-		1,448		(2	)		1
Mortgage-backed		-		-			-		786		(9	)		3		786		(9	)		3
Collateralized mortgage obligations		553		(2	)		1		-		-			-		553		(2	)		1
Corporate		4,996		(4	)		1		-		-			-		4,996		(4	)		1
Total securities with unrealized losses	$	161,445	$	(549	)		13	$	786	$	(9	)		3	$	162,231	$	(558	)		16

HTM securities:
Federal agency	$	74,228	$	(772	)		3	$	-	$	-			-	$	74,228	$	(772	)		3
State & municipal		10,594		(76	)		10		-		-			-		10,594		(76	)		10
Total securities with unrealized losses	$	84,822	$	(848	)		13	$	-	$	-			-	$	84,822	$	(848	)		13

As of December 31, 2019
AFS securities:
Federal agency	$	14,891	$	(109	)		2	$	9,866	$	(134	)		1	$	24,757	$	(243	)		3
State & municipal		2,503		(20	)		1		-		-			-		2,503		(20	)		1
Mortgage-backed		67,986		(273	)		21		37,745		(122	)		16		105,731		(395	)		37
Collateralized mortgage obligations		113,121		(316	)		24		49,632		(559	)		17		162,753		(875	)		41
Total securities with unrealized losses	$	198,501	$	(718	)		48	$	97,243	$	(815	)		34	$	295,744	$	(1,533	)		82

HTM securities:
Mortgage-backed	$	-	$	-			-	$	25,370	$	(155	)		2	$	25,370	$	(155	)		2
Collateralized mortgage obligations		18,040		(181	)		3		22,389		(287	)		5		40,429		(468	)		8
State & municipal		2,257		(6	)		4		-		-			-		2,257		(6	)		4
Total securities with unrealized losses	$	20,297	$	(187	)		7	$	47,759	$	(442	)		7	$	68,056	$	(629	)		14

The Company does not believe the AFS securities that were in an unrealized loss position as of September 30, 2020, which consisted of 16 individual securities, represented a credit loss impairment. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. As of September 30, 2020, the majority of the AFS securities in an unrealized loss position consisted of debt securities issued by U.S. government agencies or U.S. government-sponsored enterprises that carry the explicit and/or implicit guarantee of the U.S. government, which are widely recognized as “risk-free” and have a long history of zero credit losses. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. The Company does not intend to sell, nor is it more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may be at maturity. The Company elected to exclude accrued interest receivable (“AIR”) from the amortized cost basis of debt securities disclosed throughout this footnote. AIR on AFS debt securities totaled $2.6 million at September 30, 2020 and is excluded from the estimate of credit losses and reported in the financial statement line for other assets.

None of the bank’s HTM debt securities were past due or on non-accrual status as of the quarter ending September 30, 2020. There was no accrued interest reversed against interest income for the quarter ended September 30, 2020 as all securities remained on accrual status. In addition, there were no collateral dependent HTM debt securities as of September 30, 2020. 53% of the Company’s HTM debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit loss. Therefore, the Company did not record an allowance for credit losses for these securities as of September 30, 2020. The remaining HTM debt securities at September 30, 2020 were comprised of state and municipal obligations with bond ratings of A to AAA. Utilizing the CECL approach, the Company determined that the expected credit loss on its HTM municipal bond portfolio was immaterial and therefore no allowance for credit loss was recorded as of September 30, 2020. AIR on HTM debt securities totaled $2.7 million at September 30, 2020 and is excluded from the estimate of credit losses and reported in the financial statement line for other assets.