NOTE 2 – SECURITIES

The carrying balances of the securities were as follows:


	March 31,		December 31,
	2020		2019
	(dollars in thousands)
Debt securities available-for-sale	$	615,565	$	592,404
Debt securities held-to-maturity		79,741		88,477
Equity securities:
Readily determinable fair value		3,207		3,241
No readily determinable fair value		1,552		1,148
Total securities	$	700,065	$	685,270

The Company has elected to measure the equity securities with no readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes for identical or similar securities of the same issuer. During the three months ended March 31, 2020 and 2019, there were no adjustments to the carrying balance of equity securities with no readily determinable fair value based on an observable price change of an identical investment. As of March 31, 2020 and December 31, 2019, the carrying balance of equity securities with no readily determinable fair value reflect cumulative downward adjustments based on observable price changes of $165,000. There have been no impairments or upward adjustments based on observable price changes to equity securities with no readily determinable fair value.

The amortized cost and fair values of debt securities, with gross unrealized gains and losses, are as follows:


March 31, 2020	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:	(dollars in thousands)
U.S. government agency	$	48,983	$	2,192	$	—	$	51,175
Municipal		164,853		3,577		(185)		168,245
Mortgage-backed:
Agency residential		184,507		5,015		(904)		188,618
Agency commercial		128,583		4,050		(116)		132,517
Corporate		73,140		1,928		(58)		75,010
Total available-for-sale		600,066		16,762		(1,263)		615,565
Held-to-maturity:
Municipal		32,780		1,198		—		33,978
Mortgage-backed:
Agency residential		17,989		471		(16)		18,444
Agency commercial		28,972		2,173		(3)		31,142
Total held-to-maturity		79,741		3,842		(19)		83,564
Total debt securities	$	679,807	$	20,604	$	(1,282)	$	699,129


December 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:	(dollars in thousands)
U.S. government agency	$	49,113	$	529	$	(27)	$	49,615
Municipal		131,241		2,503		(6)		133,738
Mortgage-backed:
Agency residential		198,184		2,780		(286)		200,678
Agency commercial		133,730		1,516		(292)		134,954
Corporate		72,239		1,180		—		73,419
Total available-for-sale		584,507		8,508		(611)		592,404
Held-to-maturity:
Municipal		45,239		1,340		—		46,579
Mortgage-backed:
Agency residential		19,072		161		(170)		19,063
Agency commercial		24,166		775		(54)		24,887
Total held-to-maturity		88,477		2,276		(224)		90,529
Total debt securities	$	672,984	$	10,784	$	(835)	$	682,933

As of March 31, 2020 and December 31, 2019, the Banks had debt securities with a carrying value of $286,716,000 and $284,895,000, respectively, which were pledged to secure public and trust deposits, securities sold under agreements to repurchase, and for other purposes required or permitted by law.

The Company has no direct exposure to the State of Illinois, but approximately 42% of the obligations of local municipalities portfolio consists of debt securities issued by municipalities located in Illinois as of March 31, 2020. Approximately 87% of such debt securities were general obligation issues as of March 31, 2020.

The amortized cost and fair value of debt securities by contractual maturity, as of March 31, 2020, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(dollars in thousands)
Due in 1 year or less	$	47,084	$	47,237	$	750	$	755
Due after 1 year through 5 years		93,864		95,997		17,243		17,745
Due after 5 years through 10 years		120,398		124,689		13,896		14,551
Due after 10 years		25,630		26,507		891		927

Mortgage-backed:
Agency residential		184,507		188,618		17,989		18,444
Agency commercial		128,583		132,517		28,972		31,142
Total	$	600,066	$	615,565	$	79,741	$	83,564

There were no sales of securities were as follows during the three months ended March 31, 2020 and 2019. Gains (losses) on securities were as follows during the three months ended March 31:


	Three Months Ended March 31,
	2020		2019
	(dollars in thousands)
Net realized gains (losses) on sales	$	—	$	—
Net unrealized gains (losses) on equities:
Readily determinable fair value		(52)		79
No readily determinable fair value		—		—
Gains (losses) on securities	$	(52)	$	79

The following tables present gross unrealized losses and fair value of debt securities, aggregated by category and length of time that individual debt securities have been in a continuous unrealized loss position, as of March 31, 2020 and December 31, 2019:


	Investments in a Continuous Unrealized Loss Position
	Less than 12 Months				12 Months or More				Total
March 31, 2020	Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value
Available-for-sale:	(dollars in thousands)
Municipal	$	(185)	$	5,049	$	—	$	—	$	(185)	$	5,049
Mortgage-backed:
Agency residential		(648)		34,061		(256)		8,442		(904)		42,503
Agency commercial		—		—		(116)		14,322		(116)		14,322
Corporate		(58)		6,942		—		—		(58)		6,942
Total available-for-sale		(891)		46,052		(372)		22,764		(1,263)		68,816
Held-to-maturity:
Mortgage-backed:
Agency residential		—		—		(16)		1,549		(16)		1,549
Agency commercial		—		—		(3)		534		(3)		534
Total held-to-maturity		—		—		(19)		2,083		(19)		2,083
Total debt securities	$	(891)	$	46,052	$	(391)	$	24,847	$	(1,282)	$	70,899


	Investments in a Continuous Unrealized Loss Position
	Less than 12 Months				12 Months or More				Total
December 31, 2019	Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value
Available-for-sale:	(dollars in thousands)
U.S. government agency	$	(26)	$	18,865	$	(1)	$	1,998	$	(27)	$	20,863
Municipal		(6)		894		—		—		(6)		894
Mortgage-backed:
Agency residential		(108)		25,563		(178)		27,296		(286)		52,859
Agency commercial		(100)		20,056		(192)		15,704		(292)		35,760
Total available-for-sale	$	(240)	$	65,378	$	(371)	$	44,998	$	(611)	$	110,376
Held-to-maturity:
Mortgage-backed:
Agency residential	$	(30)	$	2,516	$	(140)	$	9,002	$	(170)	$	11,518
Agency commercial		(47)		7,016		(7)		599		(54)		7,615
Total held-to-maturity		(77)		9,532		(147)		9,601		(224)		19,133
Total debt securities	$	(317)	$	74,910	$	(518)	$	54,599	$	(835)	$	129,509

As of March 31, 2020, there were 17 debt securities in an unrealized loss position for a period of twelve months or more, and 53 debt securities in an unrealized loss position for a period of less than twelve months. These unrealized losses are primarily a result of fluctuations in market interest rates. In analyzing an issuer’s financial condition, management considers whether the debt securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports. Management believes that all declines in value of these debt securities are deemed to be temporary.