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SECURITIES | 9 Months Ended
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Sep. 30, 2020
SECURITIES |
SECURITIES | NOTE 2 – SECURITIES The carrying balances of the securities were as follows:
|  | September 30, |  | December 31,
|  | 2020 |  | 2019
|  | (dollars in thousands)
Debt securities available-for-sale |  | $ | 814,798 |  | $ | 592,404
Debt securities held-to-maturity |  |  | 74,510 |  |  | 88,477
Equity securities: |  |  |  |  |  |
Readily determinable fair value |  |  | 3,262 |  |  | 3,241
No readily determinable fair value |  |  | 1,552 |  |  | 1,148
Total securities |  | $ | 894,122 |  | $ | 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 and nine months ended September 30, 2020, 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. During the three and nine months ended September 30, 2019, there were downward adjustments of $128,000 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 September 30, 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 the equity securities with no readily determinable fair value held at September 30, 2020 and December 31, 2019. The amortized cost and fair values of debt securities, with gross unrealized gains and losses, are as follows:
September 30, 2020 |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Available-for-sale: |  | (dollars in thousands)
U.S. government agency |  | $ | 100,462 |  | $ | 3,866 |  | $ | (2) |  | $ | 104,326
Municipal |  |  | 232,795 |  |  | 7,962 |  |  | (347) |  |  | 240,410
Mortgage-backed: |  |  |  |  |  |  |  |  |  |  |  |
Agency residential |  |  | 220,970 |  |  | 5,462 |  |  | (115) |  |  | 226,317
Agency commercial |  |  | 166,444 |  |  | 4,831 |  |  | (203) |  |  | 171,072
Corporate |  |  | 70,862 |  |  | 1,907 |  |  | (96) |  |  | 72,673
Total available-for-sale |  |  | 791,533 |  |  | 24,028 |  |  | (763) |  |  | 814,798
Held-to-maturity: |  |  |  |  |  |  |  |  |  |  |  |
Municipal |  |  | 26,830 |  |  | 1,480 |  |  | — |  |  | 28,310
Mortgage-backed: |  |  |  |  |  |  |  |  |  |  |  |
Agency residential |  |  | 14,556 |  |  | 523 |  |  | — |  |  | 15,079
Agency commercial |  |  | 33,124 |  |  | 2,378 |  |  | — |  |  | 35,502
Total held-to-maturity |  |  | 74,510 |  |  | 4,381 |  |  | — |  |  | 78,891
Total debt securities |  | $ | 866,043 |  | $ | 28,409 |  | $ | (763) |  | $ | 893,689
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 September 30, 2020 and December 31, 2019, the Banks had debt securities with a carrying value of $349,412,000 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 41% of the obligations of local municipalities portfolio consists of debt securities issued by municipalities located in Illinois as of September 30, 2020. Approximately 87% of such debt securities were general obligation issues as of September 30, 2020. The amortized cost and fair value of debt securities by contractual maturity, as of September 30, 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 |  | $ | 36,762 |  | $ | 37,033 |  | $ | 747 |  | $ | 749
Due after 1 year through 5 years |  |  | 85,100 |  |  | 87,897 |  |  | 14,702 |  |  | 15,452
Due after 5 years through 10 years |  |  | 183,944 |  |  | 191,538 |  |  | 10,490 |  |  | 11,186
Due after 10 years |  |  | 98,313 |  |  | 100,941 |  |  | 891 |  |  | 923
Mortgage-backed: |  |  |  |  |  |  |  |  |  |  |  |
Agency residential |  |  | 220,970 |  |  | 226,317 |  |  | 14,556 |  |  | 15,079
Agency commercial |  |  | 166,444 |  |  | 171,072 |  |  | 33,124 |  |  | 35,502
Total |  | $ | 791,533 |  | $ | 814,798 |  | $ | 74,510 |  | $ | 78,891
There were no sales of securities during the three and nine months ended September 30, 2020 and 2019. Gains (losses) on securities were as follows during the three and nine months ended September 30:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2020 |  | 2019 |  | 2020 |  | 2019
|  | (dollars in thousands)
Net realized gains (losses) on sales |  | $ | — |  | $ | — |  | $ | — |  | $ | —
Net unrealized gains (losses) on equities: |  |  |  |  |  |  |  |  |  |  |  |
Readily determinable fair value |  |  | (2) |  |  | 55 |  |  | 3 |  |  | 170
No readily determinable fair value |  |  | — |  |  | (128) |  |  | — |  |  | (128)
Gains (losses) on securities |  | $ | (2) |  | $ | (73) |  | $ | 3 |  | $ | 42
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 September 30, 2020 and December 31, 2019:
|  | Investments in a Continuous Unrealized Loss Position
|  | Less than 12 Months |  | 12 Months or More |  | Total
September 30, 2020 |  | Unrealized Loss |  | Fair Value |  | Unrealized Loss |  | Fair Value |  | Unrealized Loss |  | Fair Value
Available-for-sale: |  | (dollars in thousands)
U.S. government agency |  | $ | (2) |  | $ | 3,493 |  | $ | — |  | $ | — |  | $ | (2) |  | $ | 3,493
Municipal |  |  | (347) |  |  | 28,955 |  |  | — |  |  | — |  |  | (347) |  |  | 28,955
Mortgage-backed: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency residential |  |  | (101) |  |  | 20,386 |  |  | (14) |  |  | 4,378 |  |  | (115) |  |  | 24,764
Agency commercial |  |  | (177) |  |  | 22,668 |  |  | (26) |  |  | 3,471 |  |  | (203) |  |  | 26,139
Corporate |  |  | (96) |  |  | 9,858 |  |  | — |  |  | — |  |  | (96) |  |  | 9,858
Total available-for-sale |  |  | (723) |  |  | 85,360 |  |  | (40) |  |  | 7,849 |  |  | (763) |  |  | 93,209
Total debt securities |  | $ | (723) |  | $ | 85,360 |  | $ | (40) |  | $ | 7,849 |  | $ | (763) |  | $ | 93,209
|  | 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 September 30, 2020, there were 7 debt securities in an unrealized loss position for a period of twelve months or more, and 58 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.

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