Securities

3 Months Ended

Mar. 31, 2021

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 March 31, 2021
Federal agency	$	258,479	$	2	$	9,594	$	248,887
State & municipal		49,048		128		1,151		48,025
Mortgage-backed:
Government-sponsored enterprises		606,988		12,506		5,448		614,046
U.S. government agency securities		57,913		1,390		110		59,193
Collateralized mortgage obligations:
Government-sponsored enterprises		278,532		6,568		934		284,166
U.S. government agency securities		101,892		2,655		-		104,547
Corporate		27,500		709		45		28,164
Total AFS securities	$	1,380,352	$	23,958	$	17,282	$	1,387,028
As of December 31, 2020
Federal agency	$	245,590	$	59	$	2,052	$	243,597
State & municipal		42,550		630		-		43,180
Mortgage-backed:
Government-sponsored enterprises		521,448		17,079		22		538,505
U.S. government agency securities		55,049		2,332		47		57,334
Collateralized mortgage obligations:
Government-sponsored enterprises		311,710		7,549		58		319,201
U.S. government agency securities		114,864		3,739		-		118,603
Corporate		27,500		778		-		28,278
Total AFS securities	$	1,318,711	$	32,166	$	2,179	$	1,348,698

There was no allowance for credit losses on AFS securities as March 31, 2021 and December 31, 2020.

During the three months ended March 31, 2021 there were no gains or losses reclassified out of accumulated other comprehensive income (loss) (“AOCI”) and into earnings. During the three months ended March 31, 2020 there were $3 thousand of gross realized gains reclassified out of AOCI and into earnings. Included in net realized gains (losses) on AFS securities, the Company recorded gains from call of approximately $3 thousand for the three months ended March 31, 2020.

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 March 31, 2021
Federal agency	$	100,000	$	-	$	5,841	$	94,159
Mortgage-backed:
Government-sponsored enterprises		92,584		3,312		108		95,788
U.S. government agency securities		10,309		670		-		10,979
Collateralized mortgage obligations:
Government-sponsored enterprises		92,059		4,078		-		96,137
U.S. government agency securities		53,814		2,124		-		55,938
State & municipal		244,233		5,309		2,367		247,175
Total HTM securities	$	592,999	$	15,493	$	8,316	$	600,176
As of December 31, 2020
Federal agency	$	100,000	$	-	$	1,658	$	98,342
Mortgage-backed:
Government-sponsored enterprises		107,914		4,583		-		112,497
U.S. government agency securities		11,533		979		-		12,512
Collateralized mortgage obligations:
Government-sponsored enterprises		103,105		4,477		-		107,582
U.S. government agency securities		79,145		3,950		-		83,095
State & municipal		214,863		7,953		17		222,799
Total HTM securities	$	616,560	$	21,942	$	1,675	$	636,827

At March 31, 2021 and December 31, 2020, 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 March 31, 2021 and December 31, 2020.

Included in net realized gains (losses), the Company recorded gains from calls on HTM securities of approximately $15 thousand for the three months ended March 31, 2021. There were no recorded gains from calls on HTM securities included in net realized gains (losses) for the three months ended March 31, 2020.

AFS and HTM securities with amortized costs totaling $1.6 billion at March 31, 2021 and $1.4 billion December 31, 2020 were pledged to secure public deposits and for other purposes required or permitted by law. Additionally, at March 31, 2021 and December 31, 2020, AFS and HTM securities with an amortized cost of $273.2 million and $305.2 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

The following table sets forth information with regard to gains and (losses) on equity securities:

	Three Months Ended March 31,
(In thousands)	2021		2020
Net gains and (losses) recognized on equity securities	$	452	$	(815	)
Less: Net gains and (losses) recognized on equity securities sold during the period		-		-
Unrealized gains and (losses) recognized on equity securities still held	$	452	$	(815	)

As of March 31, 2021 and December 31, 2020, the carrying value of equity securities without readily determinable fair values was $2.0 million. The Company performed a qualitative assessment to determine whether the investments were impaired and identified no areas of concern as of March 31, 2021 and 2020. There were no impairments, downward or upward adjustments recognized for equity securities without readily determinable fair values during the three months ended March 31, 2021 and 2020.

The following table sets forth information with regard to contractual maturities of debt securities at March 31, 2021:

(In thousands)	Amortized Cost		Estimated Fair Value
AFS debt securities:
Within one year	$	1,710	$	1,724
From one to five years		22,127		22,984
From five to ten years		572,232		564,112
After ten years		784,283		798,208
Total AFS debt securities	$	1,380,352	$	1,387,028
HTM debt securities:
Within one year	$	18,116	$	18,155
From one to five years		57,331		58,621
From five to ten years		228,313		227,625
After ten years		289,239		295,775
Total HTM debt securities	$	592,999	$	600,176

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 March 31, 2021 and December 31, 2020.

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, 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 March 31, 2021
AFS securities:
Federal agency	$	238,885	$	(9,594	)		16	$	-	$	-			-	$	238,885	$	(9,594	)		16
State & municipal		45,370		(1,151	)		28		-		-			-		45,370		(1,151	)		28
Mortgage-backed		289,888		(5,549	)		21		787		(9	)		4		290,675		(5,558	)		25
Collateralized mortgage obligations		32,238		(934	)		11		-		-			-		32,238		(934	)		11
Corporate		7,455		(45	)		3		-		-			-		7,455		(45	)		3
Total securities with unrealized losses	$	613,836	$	(17,273	)		79	$	787	$	(9	)		4	$	614,623	$	(17,282	)		83

HTM securities:
Federal agency	$	94,159	$	(5,841	)		4	$	-	$	-			-	$	94,159	$	(5,841	)		4
Mortgage-backed		8,312		(108	)		1		-		-			-		8,312		(108	)		1
State & municipal		70,315		(2,367	)		56		-		-			-		70,315		(2,367	)		56
Total securities with unrealized losses	$	172,786	$	(8,316	)		61	$	-	$	-			-	$	172,786	$	(8,316	)		61

As of December 31, 2020
AFS securities:
Federal agency	$	148,537	$	(2,052	)		10	$	-	$	-			-	$	148,537	$	(2,052	)		10
Mortgage-backed		47,269		(60	)		3		800		(9	)		4		48,069		(69	)		7
Collateralized mortgage obligations		17,837		(58	)		6		-		-			-		17,837		(58	)		6
Total securities with unrealized losses	$	213,643	$	(2,170	)		19	$	800	$	(9	)		4	$	214,443	$	(2,179	)		23

HTM securities:
Federal agency	$	98,342	$	(1,658	)		4	$	-	$	-			-	$	98,342	$	(1,658	)		4
State & municipal		4,805		(17	)		5		-		-			-		4,805		(17	)		5
Total securities with unrealized losses	$	103,147	$	(1,675	)		9	$	-	$	-			-	$	103,147	$	(1,675	)		9

The Company does not believe the AFS securities that were in an unrealized loss position as of March 31, 2021 and December 31, 2020, which consisted of 83 and 23 individual securities, respectively, 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 March 31, 2021 and December 31, 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 $3.2 million at March 31, 2021 and $3.3 million at December 31, 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 March 31, 2021 and December 31, 2020. There was no accrued interest reversed against interest income for the three months ended March 31, 2021 or the year-ended December 31, 2020 as all securities remained on accrual status. In addition, there were no collateral-dependent HTM debt securities as of March 31, 2021 and December 31, 2020. As of March 31, 2021 and December 31, 2020, 59% and 65%, respectively, of the Company’s HTM debt securities were 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 March 31, 2021 and December 31, 2020. The remaining HTM debt securities at March 31, 2021 and December 31, 2020 were comprised of state and municipal obligations with bond ratings of A to AAA. Utilizing the Current Expected Credit Losses (“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 March 31, 2021 and December 31, 2020. AIR on HTM debt securities totaled $2.7 million at March 31, 2021 and December 31, 2020 and is excluded from the estimate of credit losses and reported in the other assets financial statement line.