XML 98 R12.htm IDEA: XBRL DOCUMENT
v3.20.1

SECURITIES | 3 Months Ended
--- | ---
Mar. 31, 2020
SECURITIES. |
SECURITIES | 4. SECURITIES Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax. Equity securities are carried at fair value, with changes in fair value reported in net income. Equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting in observable price changes in orderly transactions for the identical or a similar investment. Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. The Company has made a policy election to exclude accrued interest from the amortized cost basis of debt securities and report accrued interest separately in other assets in the consolidated balance sheet. A debt security is placed on non-accrual status at the time any principal or interest payments become more than 90 days delinquent or if full collection of interest or principal becomes uncertain. Accrued interest for a security placed on non-accrual is reversed against interest income. There were no non-accrual debt securities at March 31, 2020 and there was no accrued interest related to debt securities reversed against interest income for the three months ended March 31, 2020. Gains and losses on sales are recorded on the trade date and determined using the specific identification method. On January 1, 2020, the Company adopted the CECL Standard, which requires that debt securities held to maturity be accounted for under the current expected credit losses model, including historical loss experience and impact of current conditions and reasonable and supportable forecasts, with an associated allowance for credit losses. In addition, while credit losses on debt securities available for sale should be measured in accordance with the other-than-temporary impairment (“OTTI”) framework under current GAAP, the amendments in the CECL Standard require that these credit losses be presented as an allowance for credit losses. For AFS debt securities, a decline in fair value due to credit loss results in recording an allowance for credit losses to the extent the fair value is less than the amortized cost basis. Held to maturity debt securities and the allowance for credit losses To the extent that debt securities in the held-to-maturity portfolio share common risk characteristics, estimated expected credit losses are calculated in a manner like that used for loans held for investment. That is, for pools of such debt securities with common risk characteristics, the historical lifetime probability of default and severity of loss in the event of default is derived or obtained from external sources and adjusted for the expected effects of reasonable and supportable forecasts over the expected lives of the securities. Expected credit loss on each debt security in the held-to-maturity portfolio that do not share common risk characteristics with any of the pools of debt securities is individually measured based on net realizable value, or the difference between the discounted value of the expected future cash flows, based on the original effective interest rate, and the recorded amortized cost basis of the security. With respect to certain classes of debt securities, primarily U.S. Treasuries and securities issued by Government Sponsored Entities, the Company considers the history of credit losses, current conditions and reasonable and supportable forecasts, which may indicate that the expectation that nonpayment of the amortized cost basis is or continues to be zero, even if the U.S. government were to technically default. Therefore, for those securities, the Company does not record expected credit losses. Accrued interest receivable is excluded from the estimate of credit losses. Available for sale debt securities and the allowance for credit losses Management evaluates available for sale debt securities for OTTI on at least a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the near-term prospects of the issuer. Impairment may result from credit deterioration of the issuer or collateral underlying the security. In performing an assessment of whether any decline in fair value is due to a credit loss, all relevant information is considered at the individual security level. For asset-backed securities performance indicators considered related to the underlying assets include default rates, delinquency rates, percentage of non-performing assets, debt-to-collateral ratios, third party guarantees, current levels of subordination, vintage, geographic concentration, analyst reports and forecasts, credit ratings and other market data. In assessing whether a credit loss exists, we compare 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 the fair value is less than amortized cost basis. Declines in fair value that have not been recorded through an allowance for credit losses, such as declines due to changes in market interest rates, are excluded from earnings and reported, net of tax, in other comprehensive income (“OCI”). Management also assesses whether it intends to sell or is more likely than not that it will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. Accrued interest receivable is excluded from the estimate of credit losses. The following table summarizes the amortized cost and estimated fair value of the available for sale and held to maturity investment securities portfolio at March 31, 2020 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses, respectively:
|  | March 31, 2020
|  |  |  | Gross |  | Gross |  | Estimated
|  | Amortized |  | Unrealized |  | Unrealized |  | Fair
(In thousands) |  | Cost |  | Gains |  | Losses |  | Value
Available for sale: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 59,980 |  | $ | 19 |  | $ | — |  | $ | 59,999
State and municipal obligations |  |  | 37,233 |  |  | 805 |  |  | (92) |  |  | 37,946
U.S. GSE residential mortgage-backed securities |  |  | 80,136 |  |  | 1,756 |  |  | (238) |  |  | 81,654
U.S. GSE residential collateralized mortgage obligations |  |  | 200,029 |  |  | 5,463 |  |  | — |  |  | 205,492
U.S. GSE commercial mortgage-backed securities |  |  | 16,683 |  |  | 366 |  |  | — |  |  | 17,049
U.S. GSE commercial collateralized mortgage obligations |  |  | 81,310 |  |  | 2,148 |  |  | (78) |  |  | 83,380
Other asset backed securities |  |  | 24,250 |  |  | — |  |  | (1,698) |  |  | 22,552
Corporate bonds |  |  | 49,000 |  |  | — |  |  | (3,794) |  |  | 45,206
Total available for sale |  |  | 548,621 |  |  | 10,557 |  |  | (5,900) |  |  | 553,278
|  |  |  | Gross |  | Gross |  | Estimated
|  | Amortized |  | Unrecognized |  | Unrecognized |  | Fair
(In thousands) |  | Cost |  | Gains |  | Losses |  | Value
Held to maturity: |  |  |  |  |  |  |  |  |  |  |  |
State and municipal obligations |  |  | 34,046 |  |  | 807 |  |  | — |  |  | 34,853
U.S. GSE residential mortgage-backed securities |  |  | 7,737 |  |  | 141 |  |  | — |  |  | 7,878
U.S. GSE residential collateralized mortgage obligations |  |  | 38,076 |  |  | 1,610 |  |  | — |  |  | 39,686
U.S. GSE commercial mortgage-backed securities |  |  | 17,021 |  |  | 503 |  |  | — |  |  | 17,524
U.S. GSE commercial collateralized mortgage obligations |  |  | 27,351 |  |  | 371 |  |  | (10) |  |  | 27,712
Total held to maturity |  |  | 124,231 |  |  | 3,432 |  |  | (10) |  |  | 127,653
Total securities |  | $ | 672,852 |  | $ | 13,989 |  | $ | (5,910) |  | $ | 680,931
As of March 31, 2020, none of the Company’s available for sale debt securities were in an unrealized loss position due to credit and therefore no allowance for credit losses on available for sale debt securities was required. Additionally, the calculated allowance for credit losses on held to maturity securities was inconsequential given the high quality composition of the Company’s held to maturity portfolio and therefore no allowance for credit losses was recorded. Accrued interest receivable on securities totaling $2.1 million at March 31, 2020 was included in other assets in the consolidated balance sheet and excluded from the amortized cost and estimated fair value totals in the table above. The following table summarizes the amortized cost and estimated fair value of the available for sale and held to maturity investment securities portfolio at December 31, 2019 and the corresponding amounts of gross unrealized gains and losses therein:
|  | December 31, 2019
|  |  |  | Gross |  | Gross |  | Estimated
|  | Amortized |  | Unrealized |  | Unrealized |  | Fair
(In thousands) |  | Cost |  | Gains |  | Losses |  | Value
Available for sale: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 50,833 |  | $ | — |  | $ | (11) |  | $ | 50,822
U.S. GSE securities |  |  | 5,000 |  |  | — |  |  | (5) |  |  | 4,995
State and municipal obligations |  |  | 34,303 |  |  | 704 |  |  | (43) |  |  | 34,964
U.S. GSE residential mortgage-backed securities |  |  | 84,550 |  |  | 609 |  |  | (468) |  |  | 84,691
U.S. GSE residential collateralized mortgage obligations |  |  | 278,149 |  |  | 1,166 |  |  | (1,464) |  |  | 277,851
U.S. GSE commercial mortgage-backed securities |  |  | 13,656 |  |  | 23 |  |  | (70) |  |  | 13,609
U.S. GSE commercial collateralized mortgage obligations |  |  | 102,722 |  |  | 1,723 |  |  | (289) |  |  | 104,156
Other asset-backed securities |  |  | 24,250 |  |  | — |  |  | (849) |  |  | 23,401
Corporate bonds |  |  | 46,000 |  |  | — |  |  | (2,198) |  |  | 43,802
Total available for sale |  |  | 639,463 |  |  | 4,225 |  |  | (5,397) |  |  | 638,291
Held to maturity: |  |  |  |  |  |  |  |  |  |  |  |
State and municipal obligations |  |  | 41,008 |  |  | 809 |  |  | — |  |  | 41,817
U.S. GSE residential mortgage-backed securities |  |  | 8,142 |  |  | 5 |  |  | (54) |  |  | 8,093
U.S. GSE residential collateralized mortgage obligations |  |  | 39,936 |  |  | 624 |  |  | (62) |  |  | 40,498
U.S. GSE commercial mortgage-backed securities |  |  | 17,215 |  |  | 102 |  |  | (82) |  |  | 17,235
U.S. GSE commercial collateralized mortgage obligations |  |  | 27,337 |  |  | 191 |  |  | (144) |  |  | 27,384
Total held to maturity |  |  | 133,638 |  |  | 1,731 |  |  | (342) |  |  | 135,027
Total securities |  | $ | 773,101 |  | $ | 5,956 |  | $ | (5,739) |  | $ | 773,318
The following table summarizes available for sale debt securities with gross unrealized losses for which an allowance for credit losses has not been recorded at March 31, 2020, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position:
|  | March 31, 2020
|  | Less than 12 months |  | Greater than 12 months
|  | Estimated |  | Gross |  | Estimated |  | Gross
|  | Fair |  | Unrealized |  | Fair |  | Unrealized
(In thousands) |  | Value |  | Losses |  | Value |  | Losses
Available for sale: |  |  |  |  |  |  |  |  |  |  |  |
State and municipal obligations |  | $ | 5,232 |  | $ | (92) |  | $ | — |  | $ | —
U.S. GSE residential mortgage-backed securities |  |  | 17,934 |  |  | (162) |  |  | 4,219 |  |  | (76)
U.S. GSE commercial collateralized mortgage obligations |  |  | 6,616 |  |  | (67) |  |  | 2,020 |  |  | (11)
Other asset backed securities |  |  | — |  |  | — |  |  | 22,552 |  |  | (1,698)
Corporate bonds |  |  | 4,739 |  |  | (261) |  |  | 37,467 |  |  | (3,533)
Total available for sale |  | $ | 34,521 |  | $ | (582) |  | $ | 66,258 |  | $ | (5,318)
The following table summarizes securities with gross unrealized losses at December 31, 2019, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position:
|  | December 31, 2019
|  | Less than 12 months |  | Greater than 12 months
|  | Estimated |  | Gross |  | Estimated |  | Gross
|  | Fair |  | Unrealized |  | Fair |  | Unrealized
(In thousands) |  | Value |  | Losses |  | Value |  | Losses
Available for sale: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 50,822 |  | $ | (11) |  | $ | — |  | $ | —
U.S. GSE securities |  |  | — |  |  | — |  |  | 4,995 |  |  | (5)
State and municipal obligations |  |  | 4,982 |  |  | (42) |  |  | 76 |  |  | (1)
U.S. GSE residential mortgage-backed securities |  |  | 2,935 |  |  | (30) |  |  | 39,617 |  |  | (438)
U.S. GSE residential collateralized mortgage obligations |  |  | 81,377 |  |  | (480) |  |  | 93,403 |  |  | (984)
U.S. GSE commercial mortgage-backed securities |  |  | 6,648 |  |  | (70) |  |  | — |  |  | —
U.S. GSE commercial collateralized mortgage obligations |  |  | 28,710 |  |  | (145) |  |  | 9,614 |  |  | (144)
Other asset-backed securities |  |  | — |  |  | — |  |  | 23,401 |  |  | (849)
Corporate bonds |  |  | — |  |  | — |  |  | 43,802 |  |  | (2,198)
Total available for sale |  | $ | 175,474 |  | $ | (778) |  | $ | 214,908 |  | $ | (4,619)
Held to maturity: |  |  |  |  |  |  |  |  |  |  |  |
State and municipal obligations |  | $ | — |  | $ | — |  | $ | — |  | $ | —
U.S. GSE residential mortgage-backed securities |  |  | — |  |  | — |  |  | 7,268 |  |  | (54)
U.S. GSE residential collateralized mortgage obligations |  |  | 6,750 |  |  | (17) |  |  | 6,105 |  |  | (45)
U.S. GSE commercial mortgage-backed securities |  |  | — |  |  | — |  |  | 5,034 |  |  | (82)
U.S. GSE commercial collateralized mortgage obligations |  |  | 13,038 |  |  | (57) |  |  | 4,300 |  |  | (87)
Total held to maturity |  | $ | 19,788 |  | $ | (74) |  | $ | 22,707 |  | $ | (268)
Other-Than-Temporary Impairment Management evaluates available for sale debt securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value. At March 31, 2020, substantially all of the securities in an unrealized loss position had a variable interest rate and the cause of the temporary impairment was directly related to changes in interest rates. The Company generally views changes in fair value caused by changes in interest rates as temporary, which is consistent with its experience. Other asset backed securities are comprised of student loan backed bonds which are guaranteed by the U.S. Department of Education for 97% to 100% of principal. Additionally, the bonds have credit support of 3% to 5% and have maintained their Aa3 Moody's rating during the time the Bank has owned them. The corporate bonds within the portfolio have all maintained an investment grade rating by either Moody's or Standard and Poor's. None of the unrealized losses is related to credit losses. The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. The issuers continue to make timely principal and interest payments on the debt. The fair value is expected to recover as the securities approach maturity. Therefore, the Company does not consider these securities to be other-than-temporarily impaired at March 31, 2020. Sales and Calls of Securities There were $74.6 million of proceeds from sale of securities for the three months ended March 31, 2020 with gross gains of approximately $0.8 million realized in 2020 and gross losses of approximately $0.8 million realized in 2020. There were no proceeds from sales of securities for the three months ended March 31, 2019. There were $5.3 million and $7.9 million of proceeds from calls of securities for the three months ended March 31, 2020 and 2019, respectively. Pledged Securities Securities having a fair value of $402.6 million and $402.2 million at March 31, 2020 and December 31, 2019, respectively, were pledged to secure public deposits and Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) overnight borrowings. Trading Securities The Company did not hold any trading securities during the three months ended March 31, 2020 or the year ended December 31, 2019. Restricted Securities The Bank is a member of the FHLB of New York. Members are required to own a particular amount of stock based on the level of borrowings and other factors and may invest in additional amounts. The Bank is a member of the Atlantic Central Banker's Bank (“ACBB”) and is required to own ACBB stock. The Bank is also a member of the FRB system and required to own FRB stock. FHLB, ACBB and FRB stock is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. The Bank owned $26.4 million and $32.9 million in FHLB, ACBB and FRB stock at March 31, 2020 and December 31, 2019, respectively. These amounts were reported as restricted securities in the consolidated balance sheets. As of March 31, 2020 and 2019, there was no issuer, other than the U.S. Government and its sponsored entities, where the bank had invested holdings that exceeded 10% of consolidated stockholders’ equity. The following table summarizes the amortized cost and estimated fair value by contractual maturity of the available for sale and held to maturity investment securities portfolio at March 31, 2020. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
|  | March 31, 2020
|  | Amortized |  | Estimated
(In thousands) |  | Cost |  | Fair Value
Maturity |  |  |  |  |  |
Available for sale: |  |  |  |  |  |
Within one year |  | $ | 61,121 |  | $ | 61,140
One to five years |  |  | 44,986 |  |  | 44,668
Five to ten years |  |  | 58,330 |  |  | 56,068
Beyond ten years |  |  | 384,184 |  |  | 391,402
Total |  | $ | 548,621 |  | $ | 553,278
Held to maturity: |  |  |  |  |  |
Within one year |  | $ | 2,090 |  | $ | 2,097
One to five years |  |  | 27,816 |  |  | 28,373
Five to ten years |  |  | 23,052 |  |  | 23,841
Beyond ten years |  |  | 71,273 |  |  | 73,342
Total |  | $ | 124,231 |  | $ | 127,653

X
- References No definition available. + Details
Name: | us-gaap_InvestmentsDebtAndEquitySecuritiesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI http://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2176304 + Details
Name: | us-gaap_InvestmentsInDebtAndMarketableEquitySecuritiesAndCertainTradingAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration