SECURITIES

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Information related to the amortized cost, fair value and allowance for credit losses of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income is provided in the tables below.


(dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
September 30, 2021
U.S. Treasury securities	$	900	$	0	$	0	$	0	$	900
U.S. government sponsored agencies	118,681		17		(2,237)		0		116,461
Mortgage-backed securities: residential	430,388		5,511		(4,066)		0		431,833
Mortgage-backed securities: commercial	23,699		483		0		0		24,182
State and municipal securities	650,561		20,955		(5,177)		0		666,339
Total	$	1,224,229	$	26,966	$	(11,480)	$	0	$	1,239,715

December 31, 2020
U.S. government sponsored agencies	$	36,492	$	56	$	(61)	$	0	$	36,487
Mortgage-backed securities: residential	270,231		9,289		(17)		0		279,503
Mortgage-backed securities: commercial	35,877		1,004		0		0		36,881
State and municipal securities	355,306		26,696		(28)		0		381,974
Total	$	697,906	$	37,045	$	(106)	$	0	$	734,845

Information regarding the fair value and amortized cost of available-for-sale debt securities by maturity as of September 30, 2021 is presented below. Maturity information is based on contractual maturity for all securities other than mortgage-backed securities. Actual maturities of securities may differ from contractual maturities because borrowers may have the right to prepay the obligation without a prepayment penalty.


(dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	4,245	$	4,256
Due after one year through five years	11,953		12,284
Due after five years through ten years	50,464		52,987
Due after ten years	703,480		714,173
	770,142		783,700
Mortgage-backed securities	454,087		456,015
Total debt securities	$	1,224,229	$	1,239,715

Securities proceeds, gross gains and gross losses are presented below.


	Three months ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2021		2020		2021		2020
Sales of securities available-for-sale
Proceeds	$	0	$	5,265	$	13,964	$	6,413
Gross gains	0		314		797		363
Gross losses	0		0		0		0
Number of securities	0		12		8		15

In accordance with ASU No. 2017-8, purchase premiums for callable securities are amortized to the earliest call date and premiums on non-callable securities as well as discounts are recognized in interest income using the interest method over the terms of the securities or over the estimated lives of mortgage-backed securities. Gains and losses on sales are based on the amortized cost of the security sold and recorded on the trade date.

Securities with carrying values of $314.7 million and $382.7 million were pledged as of September 30, 2021 and December 31, 2020, respectively, as collateral for borrowings from the Federal Home Loan Bank and Federal Reserve Bank and for other purposes as permitted or required by law.

Information regarding securities with unrealized losses as of September 30, 2021 and December 31, 2020 is presented below. The tables divide the securities between those with unrealized losses for less than twelve months and those with unrealized losses for twelve months or more.


	Less than 12 months				12 months or more				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2021
U.S. government sponsored agencies	$	106,441	$	2,237	$	0	$	0	$	106,441	$	2,237
Mortgage-backed securities: residential	245,919		4,066		0		0		245,919		4,066
Mortgage-backed securities: commercial	65		0		0		0		65		0
State and municipal securities	276,881		5,177		0		0		276,881		5,177
Total temporarily impaired	$	629,306	$	11,480	$	0	$	0	$	629,306	$	11,480

December 31, 2020
U.S. government sponsored agencies	$	19,800	$	61	$	0	$	0	$	19,800	$	61
Mortgage-backed securities: residential	3		0		3,112		17		3,115		17
Mortgage-backed securities: commercial	0		0		0		0		0		0
State and municipal securities	6,921		28		0		0		6,921		28
Total temporarily impaired	$	26,724	$	89	$	3,112	$	17	$	29,836	$	106

The total number of securities with unrealized losses as of September 30, 2021 and December 31, 2020 is presented below.


	Less than 12 months	12 months or more	Total
September 30, 2021
U.S. government sponsored agencies	12	0	12
Mortgage-backed securities: residential	25	0	25
Mortgage-backed securities: commercial	1	0	1
State and municipal securities	162	0	162
Total temporarily impaired	200	0	200

December 31, 2020
U.S. government sponsored agencies	3	0	3
Mortgage-backed securities: residential	2	1	3
Mortgage-backed securities: commercial	0	0	0
State and municipal securities	2	0	2
Total temporarily impaired	7	1	8

Available-for-sale debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. For available-for sale debt securities in an unrealized loss position, management first assesses whether it intends to sell, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through the consolidated income statement. For available-for sale debt securities that do not meet the criteria, management evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security and the issuer, among other factors. If this

assessment indicates that a credit loss exists, management compares the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. No allowance for credit losses for available-for-sale debt securities was needed at September 30, 2021. Accrued interest receivable on available-for-sale debt securities totaled $6.3 million at September 30, 2021 and is excluded from the estimate of credit losses.

The U.S. government sponsored agencies and mortgage-backed securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. Therefore, for those securities, we do not record expected credit losses.

Prior to the adoption of ASC 326, there was no other-than-temporary impairment ("OTTI") recorded during the nine months ended September 30, 2020.