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Securities | 12 Months Ended
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Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract] |
Securities | Securities The amortized cost, estimated fair value and allowance for credit losses of debt securities available-for-sale and held-to-maturity at December 31, 2020 and 2019 are as follows (in thousands):
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Allowance for Credit Losses
At December 31, 2020 |  |  |  |  |  |  |  |  |  |
Debt securities available-for-sale: |  |  |  |  |  |  |  |  |  |
Investment securities: |  |  |  |  |  |  |  |  |  |
U.S. government and agency obligations |  | $ | 173,790 |  |  | $ | 3,152 |  |  | $ | (2) |  |  | $ | 176,940 |  |  | $ | — |
Collateralized loan obligations |  | 6,174 |  |  | — |  |  | (4) |  |  | 6,170 |  |  | — |
Total investment securities |  | 179,964 |  |  | 3,152 |  |  | (6) |  |  | 183,110 |  |  | — |
Mortgage-backed securities - FNMA |  | 190 |  |  | 2 |  |  | — |  |  | 192 |  |  | — |
Total debt securities available-for-sale |  | $ | 180,154 |  |  | $ | 3,154 |  |  | $ | (6) |  |  | $ | 183,302 |  |  | $ | — |
Debt securities held-to-maturity: |  |  |  |  |  |  |  |  |  |
Investment securities: |  |  |  |  |  |  |  |  |  |
State and municipal obligations |  | $ | 238,405 |  |  | $ | 11,500 |  |  | $ | (231) |  |  | $ | 249,674 |  |  | $ | (48) |
Corporate debt securities |  | 72,305 |  |  | 1,615 |  |  | (2,652) |  |  | 71,268 |  |  | (1,550) |
Total investment securities |  | 310,710 |  |  | 13,115 |  |  | (2,883) |  |  | 320,942 |  |  | (1,598) |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |
FHLMC |  | 232,942 |  |  | 5,383 |  |  | (124) |  |  | 238,201 |  |  | — |
FNMA |  | 293,615 |  |  | 7,640 |  |  | (147) |  |  | 301,108 |  |  | — |
GNMA |  | 67,334 |  |  | 2,014 |  |  | (12) |  |  | 69,336 |  |  | — |
SBA |  | 5,392 |  |  | — |  |  | (60) |  |  | 5,332 |  |  | — |
CMO |  | 32,321 |  |  | 1,226 |  |  | — |  |  | 33,547 |  |  | (117) |
Total mortgage-backed securities |  | 631,604 |  |  | 16,263 |  |  | (343) |  |  | 647,524 |  |  | (117) |
Total debt securities held-to-maturity |  | $ | 942,314 |  |  | $ | 29,378 |  |  | $ | (3,226) |  |  | $ | 968,466 |  |  | $ | (1,715) |
Total debt securities |  | $ | 1,122,468 |  |  | $ | 32,532 |  |  | $ | (3,232) |  |  | $ | 1,151,768 |  |  | $ | (1,715) |
There was no allowance for credit losses on debt securities available-for-sale at December 31, 2020.
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
At December 31, 2019 |  |  |  |  |  |  |  |
Debt securities available-for-sale: |  |  |  |  |  |  |  |
Investment securities: |  |  |  |  |  |  |  |
U.S. government and agency obligations |  | $ | 149,120 |  |  | $ | 1,408 |  |  | $ | (93) |  |  | $ | 150,435 |
State and municipal obligations |  | 25 |  |  | — |  |  | — |  |  | 25 |
Total investment securities |  | 149,145 |  |  | 1,408 |  |  | (93) |  |  | 150,460 |
Mortgage-backed securities - FNMA |  | 495 |  |  | 5 |  |  | — |  |  | 500 |
Total debt securities available-for-sale |  | $ | 149,640 |  |  | $ | 1,413 |  |  | $ | (93) |  |  | $ | 150,960 |
Debt securities held-to-maturity: |  |  |  |  |  |  |  |
Investment securities: |  |  |  |  |  |  |  |
U.S. government and agency obligations |  | $ | 4,984 |  |  | $ | 14 |  |  | $ | — |  |  | $ | 4,998 |
State and municipal obligations |  | 124,430 |  |  | 1,537 |  |  | (208) |  |  | 125,759 |
Corporate debt securities |  | 79,547 |  |  | 833 |  |  | (2,421) |  |  | 77,959 |
Total investment securities |  | 208,961 |  |  | 2,384 |  |  | (2,629) |  |  | 208,716 |
Mortgage-backed securities: |  |  |  |  |  |  |  |
FHLMC |  | 206,985 |  |  | 2,221 |  |  | (524) |  |  | 208,682 |
FNMA |  | 244,428 |  |  | 2,680 |  |  | (493) |  |  | 246,615 |
GNMA |  | 110,661 |  |  | 939 |  |  | (212) |  |  | 111,388 |
SBA |  | 1,940 |  |  | — |  |  | (51) |  |  | 1,889 |
Total mortgage-backed securities |  | 564,014 |  |  | 5,840 |  |  | (1,280) |  |  | 568,574 |
Total debt securities held-to-maturity |  | $ | 772,975 |  |  | $ | 8,224 |  |  | $ | (3,909) |  |  | $ | 777,290 |
Total debt securities |  | $ | 922,615 |  |  | $ | 9,637 |  |  | $ | (4,002) |  |  | $ | 928,250 |
The following table presents the activity in the allowance for credit losses for debt securities held-to-maturity by major security type for the year ended December 31, 2020 (in thousands):
| Investment Securities |  | Mortgage-backed Securities
Allowance for credit losses |  |  |
Beginning balance | $ | — |  |  | $ | — |
Impact of CECL adoption | (1,268) |  |  | — |
Provision for credit loss expense | (330) |  |  | (117) |
Total ending allowance balance | $ | (1,598) |  |  | $ | (117) |
During the third quarter 2013, the Bank transferred $536.0 million of previously designated available-for-sale debt securities to a held-to-maturity designation at estimated fair value. The securities transferred had an unrealized net loss of $13.3 million at the time of transfer which continues to be reflected in accumulated other comprehensive loss on the consolidated statement of financial condition, net of subsequent amortization, which is being recognized over the life of the securities. The carrying value of the debt securities held-to-maturity at December 31, 2020 and 2019 are as follows (in thousands):
|  | December 31,
|  | 2020 |  | 2019
Amortized cost |  | $ | 942,314 |  |  | $ | 772,975 |
Net loss on date of transfer from available-for-sale |  | (13,347) |  |  | (13,347) |
Allowance for credit loss |  | (1,715) |  |  | — |
Accretion of net unrealized loss on securities reclassified as held-to-maturity |  | 10,001 |  |  | 9,245 |
Carrying value |  | $ | 937,253 |  |  | $ | 768,873 |
During the year ended December 31, 2020 there were $476,000 of realized gains on debt securities. There were no realized gains or losses on debt securities for the year ended December 31, 2019. The amortized cost and estimated fair value of investment securities at December 31, 2020 by contractual maturity, are shown below (in thousands). Actual maturities may differ from contractual maturities in instances where issuers have the right to call or prepay obligations with or without call or prepayment penalties. At December 31, 2020, corporate debt securities with an amortized cost and estimated fair value of $53.8 million and $52.9 million, respectively, were callable prior to the maturity date.
December 31, 2020 |  | Amortized Cost |  | Estimated Fair Value
Less than one year |  | $ | 97,822 |  |  | $ | 98,394 |
Due after one year through five years |  | 195,949 |  |  | 201,798 |
Due after five years through ten years |  | 93,596 |  |  | 92,120 |
Due after ten years |  | 103,307 |  |  | 111,740 |
Total investment securities |  | $ | 490,674 |  |  | $ | 504,052 |
Mortgage-backed securities are excluded from the above table since their effective lives are expected to be shorter than the contractual maturity date due to principal prepayments. The estimated fair value of securities pledged as required security for deposits and for other purposes required by law amounted to $435.9 million and $475.6 million at December 31, 2020 and 2019, respectively, including $152.7 million and $81.4 million at December 31, 2020 and 2019, respectively, pledged as collateral for securities sold under agreements to repurchase. At December 31, 2020, there were no holdings of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity. The estimated fair value and unrealized losses for debt securities available-for-sale and held-to-maturity at December 31, 2020 and December 31, 2019, segregated by the duration of the unrealized losses, are as follows (in thousands):
|  | As of December 31, 2020
|  | Less than 12 months |  | 12 months or longer |  | Total
|  | Estimated Fair Value |  | Unrealized Losses |  | Estimated Fair Value |  | Unrealized Losses |  | Estimated Fair Value |  | Unrealized Losses
Debt securities available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |
Investment securities - U.S. government and agency obligations |  | $ | 17,029 |  |  | $ | (2) |  |  | $ | — |  |  | $ | — |  |  | $ | 17,029 |  |  | $ | (2) |
Collateralized loan obligations |  | 4,766 |  |  | (4) |  |  | — |  |  | — |  |  | 4,766 |  |  | (4) |
Total debt securities available-for-sale |  | 21,795 |  |  | (6) |  |  | — |  |  | — |  |  | 21,795 |  |  | (6) |
Debt securities held-to-maturity: |  |  |  |  |  |  |  |  |  |  |  |
Investment securities: |  |  |  |  |  |  |  |  |  |  |  |
State and municipal obligations |  | 2,823 |  |  | (23) |  |  | 7,509 |  |  | (208) |  |  | 10,332 |  |  | (231) |
Corporate debt securities |  | 10,192 |  |  | (255) |  |  | 35,935 |  |  | (2,397) |  |  | 46,127 |  |  | (2,652) |
Total investment securities |  | 13,015 |  |  | (278) |  |  | 43,444 |  |  | (2,605) |  |  | 56,459 |  |  | (2,883) |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |
FHLMC |  | 24,661 |  |  | (117) |  |  | 669 |  |  | (7) |  |  | 25,330 |  |  | (124) |
FNMA |  | 39,365 |  |  | (128) |  |  | 939 |  |  | (19) |  |  | 40,304 |  |  | (147) |
GNMA |  | 5,856 |  |  | (11) |  |  | 207 |  |  | (1) |  |  | 6,063 |  |  | (12) |
SBA |  | 3,626 |  |  | (12) |  |  | 1,706 |  |  | (48) |  |  | 5,332 |  |  | (60) |
Total mortgage-backed securities |  | 73,508 |  |  | (268) |  |  | 3,521 |  |  | (75) |  |  | 77,029 |  |  | (343) |
Total debt securities held-to-maturity |  | 86,523 |  |  | (546) |  |  | 46,965 |  |  | (2,680) |  |  | 133,488 |  |  | (3,226) |
Total debt securities |  | $ | 108,318 |  |  | $ | (552) |  |  | $ | 46,965 |  |  | $ | (2,680) |  |  | $ | 155,283 |  |  | $ | (3,232) |
|  | As of December 31, 2019
|  | Less than 12 months |  | 12 months or longer |  | Total
|  | Estimated Fair Value |  | Unrealized Losses |  | Estimated Fair Value |  | Unrealized Losses |  | Estimated Fair Value |  | Unrealized Losses
Debt securities available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |
Investment securities - U.S. government and agency obligations |  | $ | 25,021 |  |  | $ | (54) |  |  | $ | 22,451 |  |  | $ | (39) |  |  | $ | 47,472 |  |  | $ | (93) |
Total debt securities available-for-sale |  | 25,021 |  |  | (54) |  |  | 22,451 |  |  | (39) |  |  | 47,472 |  |  | (93) |
Debt securities held-to-maturity: |  |  |  |  |  |  |  |  |  |  |  |
Investment securities: |  |  |  |  |  |  |  |  |  |  |  |
State and municipal obligations |  | 7,308 |  |  | (58) |  |  | 14,531 |  |  | (150) |  |  | 21,839 |  |  | (208) |
Corporate debt securities |  | 9,727 |  |  | (213) |  |  | 37,628 |  |  | (2,208) |  |  | 47,355 |  |  | (2,421) |
Total investment securities |  | 17,035 |  |  | (271) |  |  | 52,159 |  |  | (2,358) |  |  | 69,194 |  |  | (2,629) |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |
FHLMC |  | 6,329 |  |  | (29) |  |  | 38,641 |  |  | (495) |  |  | 44,970 |  |  | (524) |
FNMA |  | 13,682 |  |  | (59) |  |  | 38,568 |  |  | (434) |  |  | 52,250 |  |  | (493) |
GNMA |  | 30,268 |  |  | (93) |  |  | 19,828 |  |  | (119) |  |  | 50,096 |  |  | (212) |
SBA |  | — |  |  | — |  |  | 1,889 |  |  | (51) |  |  | 1,889 |  |  | (51) |
Total mortgage-backed securities |  | 50,279 |  |  | (181) |  |  | 98,926 |  |  | (1,099) |  |  | 149,205 |  |  | (1,280) |
Total debt securities held-to-maturity |  | 67,314 |  |  | (452) |  |  | 151,085 |  |  | (3,457) |  |  | 218,399 |  |  | (3,909) |
Total debt securities |  | $ | 92,335 |  |  | $ | (506) |  |  | $ | 173,536 |  |  | $ | (3,496) |  |  | $ | 265,871 |  |  | $ | (4,002) |
At December 31, 2020, the amortized cost, estimated fair value and credit rating of the individual corporate debt securities in an unrealized loss position for greater than one year are as follows (in thousands):
|  | As of December 31, 2020
Security Description |  | Amortized Cost |  | Estimated Fair Value |  | Credit Rating Moody’s/S&P
Chase Capital |  | $ | 10,000 |  |  | $ | 9,479 |  |  | Baa1/BBB-
Wells Fargo Capital |  | 5,000 |  |  | 4,702 |  |  | A1/BBB-
Huntington Capital |  | 5,000 |  |  | 4,546 |  |  | Baa2/BB+
Keycorp Capital |  | 5,000 |  |  | 4,647 |  |  | Baa2/BB+
PNC Capital |  | 5,000 |  |  | 4,743 |  |  | Baa1/BBB-
State Street Capital |  | 3,332 |  |  | 3,147 |  |  | A3/BBB
SunTrust Capital |  | 5,000 |  |  | 4,671 |  |  | Not Rated/BBB-
Total |  | $ | 38,332 |  |  | $ | 35,935 |  |  |
At December 31, 2020, the estimated fair value of each of the above corporate debt securities was below cost. The Company concluded that these corporate debt securities were only temporarily impaired at December 31, 2020. In concluding that the impairments were only temporary, the Company considered several factors in its analysis. The Company noted that each issuer made all the contractually due payments when required. There were no defaults on principal or interest payments and no interest payments were deferred. Based on management’s analysis of each individual security, the issuers appear to have the ability to meet debt service requirements over the life of the security. Furthermore, the Company does not intend to sell these corporate debt securities and it is more likely than not that the Company will not be required to sell the securities. Historically, the Company has not utilized securities sales as a source of liquidity. The Company’s long range liquidity plans indicate adequate sources of liquidity outside the securities portfolio. The mortgage-backed securities are issued and guaranteed by either FHLMC, FNMA, GNMA, or SBA, corporations which are chartered by the United States Government and whose debt obligations are typically rated AA+ by one of the internationally-recognized credit rating services. Additionally, there are private label commercial mortgage-backed securities with credit ratings from multiple credit rating services ranging between Aaa and Aa2. The Company considers the unrealized losses to be the result of changes in interest rates, and not credit quality, which over time can have both a positive and negative impact on the estimated fair value of the mortgage-backed securities. The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell the securities before recovery of their amortized cost. As a result, the Company concluded that these securities were only temporarily impaired at December 31, 2020. State and municipal obligations are securities issued by state and local governments for various purposes. The Company is not aware of any information subsequent to the purchase of any state and municipal obligation that indicates an inability on the part of an issuer to meet all of its financial commitments. The weighted average credit rating of these securities is Aa/AA with no credit rating below Baa2/BBB. The Company has the ability and stated intention to hold these securities to maturity at which time the Company expects to receive full repayment. Current unrealized losses are considered to be the result of changes in interest rates which over time can have both a positive and negative impact on the estimated fair value of the securities. As a result, the Company concluded that these securities were not impaired as of December 31, 2020. The Company monitors the credit quality of debt securities held-to-maturity on a quarterly basis through the use of internal credit analysis supplemented by external credit ratings. The following table summarized the amortized cost of debt securities held-to-maturity at December 31, 2020 aggregated by credit quality indicator (in thousands):
| AAA |  | AA |  | A |  | BBB |  | BB |  | Total
As of December 31, 2020 |  |  |  |  |  |  |  |  |  |  |
Investment securities: |  |  |  |  |  |  |  |  |  |  |
State and municipal obligations | $ | 34,091 |  |  | $ | 130,218 |  |  | $ | 59,272 |  |  | $ | 14,824 |  |  | $ | — |  |  | $ | 238,405 |
Corporate debt securities | — |  |  | 496 |  |  | 11,978 |  |  | 48,498 |  |  | 11,333 |  |  | 72,305 |
Total investment securities | 34,091 |  |  | 130,714 |  |  | 71,250 |  |  | 63,322 |  |  | 11,333 |  |  | 310,710 |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |
CMO | 11,118 |  |  | 21,203 |  |  | — |  |  | — |  |  | — |  |  | 32,321 |
Total mortgage-backed securities | 11,118 |  |  | 21,203 |  |  | — |  |  | — |  |  | — |  |  | 32,321 |
Total debt securities held-to-maturity | $ | 45,209 |  |  | $ | 151,917 |  |  | $ | 71,250 |  |  | $ | 63,322 |  |  | $ | 11,333 |  |  | $ | 343,031 |
At December 31, 2020, and 2019, the Company held equity investments at an estimated fair value of $107.1 million and $10.1 million, respectively. The equity investments primarily comprised of select financial services institutions’ common stocks paying attractive dividends. During the year ended December 31, 2020, there were $5.4 million of realized gains on equity securities. There were no realized gains or losses on equity securities for the year ended December 31, 2019. The realized and unrealized gains on equity securities for the year ended December 31, 2020 are shown in the table below (in thousands).
| For the year ended
| December 31, 2020 |  |
Net gain on equity investments | $ | 21,214 |  |  |
Less: Net gains recognized on equity securities sold | 5,401 |  |  |
Unrealized gain recognized on equity securities still held | $ | 15,813 |  |  |

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- 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
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