INVESTMENT SECURITIES

6 Months Ended

Jun. 30, 2021

Investments, Debt and Equity Securities [Abstract]

3. INVESTMENT SECURITIES

The amortized cost, gross unrealized gains and losses, fair value and related ACL on AFS debt securities are as follows:


(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		ACL
June 30, 2021
Available-for-sale:
Debt securities:
States and political subdivisions	$	193,919	$	3,833	$	(988)	$	196,764	$	—
Corporate securities	46,999		194		(515)		46,678		—
U.S. Treasury obligations and direct obligations of U.S Government agencies	39,977		134		(377)		39,734		—
Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	984,750		8,613		(8,685)		984,678		—
Commercial - U.S. Government agencies and sponsored entities	79,970		2,094		(598)		81,466		—
Residential - Non-government agencies	15,091		428		(73)		15,446		—
Commercial - Non-government agencies	41,318		1,256		—		42,574		—
Total available-for-sale securities	$	1,402,024	$	16,552	$	(11,236)	$	1,407,340	$	—


(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		ACL
December 31, 2020
Available-for-sale:
Debt securities:
States and political subdivisions	$	163,573	$	5,370	$	(177)	$	168,766	$	—
Corporate securities	47,351		788		(131)		48,008		—
U.S. Treasury obligations and direct obligations of U.S Government agencies	33,413		18		(286)		33,145		—
Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	762,309		16,816		(299)		778,826		—
Commercial - U.S. Government agencies and sponsored entities	85,405		2,564		(500)		87,469		—
Residential - Non-government agencies	22,671		786		(34)		23,423		—
Commercial - Non-government agencies	41,309		1,663		—		42,972		—
Total available-for-sale securities	$	1,156,031	$	28,005	$	(1,427)	$	1,182,609	$	—

The amortized cost and fair value of our equity investment securities is as follows:


(dollars in thousands)	Amortized Cost		Fair Value
June 30, 2021
Equity securities	$	1,194	$	1,578

December 31, 2020
Equity securities	1,068		1,351

The amortized cost and estimated fair value of our AFS debt securities at June 30, 2021 are shown below by contractual maturity. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.


	June 30, 2021
(dollars in thousands)	Amortized Cost		Fair Value






Available-for-sale:
Due in one year or less	$	23,390	$	23,497
Due after one year through five years	27,513		28,430
Due after five years through ten years	90,757		91,326
Due after ten years	139,235		139,923

Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	984,750		984,678
Commercial - U.S. Government agencies and sponsored entities	79,970		81,466
Residential - Non-government agencies	15,091		15,446
Commercial - Non-government agencies	41,318		42,574

Total available-for-sale securities	$	1,402,024	$	1,407,340

For three and six months ended June 30, 2021, proceeds from the sale of available-for-sale investment securities were $175.0 million and resulted in a gross realized gain of $50 thousand. We did not sell any available-for-sale securities during the three and six months ended June 30, 2020.

Investment securities with fair value of $518.6 million and $483.6 million at June 30, 2021 and December 31, 2020, respectively, were pledged to secure public funds on deposit and other short-term borrowings.

At June 30, 2021 and December 31, 2020, there were no holdings of investment securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders' equity.

There were a total of 100 and 37 AFS debt securities which were in an unrealized loss position, without an ACL, at June 30, 2021 and December 31, 2020, respectively. The following tables summarize AFS debt securities which were in an unrealized loss position at June 30, 2021 and December 31, 2020, aggregated by major security type and length of time in a continuous unrealized loss position.


	Less Than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2021
Debt securities:
States and political subdivisions	$	48,529	$	(988)	$	—	$	—	$	48,529	$	(988)
Corporate securities	31,376		(515)		—		—		31,376		(515)
U.S. Treasury obligations and direct obligations of U.S Government agencies	16,694		(236)		12,858		(141)		29,552		(377)
Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	666,130		(8,685)		—		—		666,130		(8,685)
Residential - Non-government agencies	521		(41)		419		(32)		940		(73)
Commercial - U.S. Government agencies and sponsored entities	23,336		(598)		—		—		23,336		(598)

Total temporarily impaired securities	$	786,586	$	(11,063)	$	13,277	$	(173)	$	799,863	$	(11,236)


	Less Than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2020
Debt securities:
States and political subdivisions	$	21,313	$	(177)	$	—	$	—	$	21,313	$	(177)
Corporate securities	4,869		(131)		—		—		4,869		(131)
U.S. Treasury obligations and direct obligations of U.S Government agencies	5,980		(24)		20,925		(262)		26,905		(286)
Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	76,402		(299)		—		—		76,402		(299)
Residential - Non-government agencies	989		(34)		—		—		989		(34)
Commercial - U.S. Government-sponsored entities	16,977		(500)		—		—		16,977		(500)

Total temporarily impaired securities	$	126,530	$	(1,165)	$	20,925	$	(262)	$	147,455	$	(1,427)

The Company has evaluated its AFS investment securities that are in an unrealized loss position and has determined that the unrealized losses on the Company's investment securities are unrelated to credit quality and are primarily attributable to changes in interest rates and volatility in the financial markets since purchase. Investment securities in an unrealized loss position are evaluated on at least a quarterly basis, and include evaluating the changes in the investment securities' ratings issued by rating agencies and changes in the financial condition of the issuer. For mortgage-related securities, delinquency and loss information with respect to the underlying collateral, changes in levels of subordination for the Company's particular position within the repayment structure, and remaining credit enhancement as compared to projected credit losses of the security are also evaluated. All of the investment securities in an unrealized loss position continue to be rated investment grade by one or more major rating agencies. Because we have no intent to sell securities in an unrealized loss position and it is not more likely than not that we will be required to sell such securities before recovery of its amortized cost basis, the Company has not recorded an ACL and unrealized losses on these securities and have not been recognized into income.

Visa Class B Common Stock

As of June 30, 2021, the Company owns 34,631 shares of Class B common stock of Visa, Inc. ("Visa"). These shares were received in 2008 as part of Visa's initial public offering ("IPO"). These shares are transferable only under limited circumstances until they can be converted into shares of the publicly traded Class A common stock. This conversion will not occur until the

resolution of certain litigation, which is indemnified by Visa members. Since its IPO, Visa has funded a litigation reserve to settle these litigation claims. At its discretion, Visa may continue to increase the litigation reserve based upon a change in the conversion ratio of each member bank’s restricted Class B common stock to unrestricted Class A common stock. Due to the existing transfer restriction and the uncertainty of the outcome of the Visa litigation, the Company has determined that the Visa Class B common stock does not have a readily determinable fair value and chooses to carry the shares on the Company's consolidated balance sheets at zero cost basis.