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Note 2: Investments in Securities

12 Months Ended

Dec. 31, 2019

Notes

Note 2: Investments in Securities

Note 2: Investments in Securities

The amortized cost and fair values of securities classified as available-for-sale were as follows:

	December 31, 2019
				Gross			Gross
	Amortized			Unrealized			Unrealized			Fair
	Cost			Gains			Losses			Value
	(In Thousands)

Agency mortgage-backed securities	$	156,591		$	8,716		$	265		$	165,042
Agency collateralized mortgage obligations		149,980			2,891			921			151,950
States and political subdivisions		33,757			1,368			—			35,125
Small Business Administration securities		22,132			—			74			22,058

	$	362,460		$	12,975		$	1,260		$	374,175

	December 31, 2018
				Gross			Gross
	Amortized			Unrealized			Unrealized			Fair
	Cost			Gains			Losses			Value
	(In Thousands)

Agency mortgage-backed securities	$	154,557		$	1,272		$	2,571		$	153,258
Agency collateralized mortgage obligations		39,024			250			14			39,260
States and political subdivisions		50,022			1,428			—			51,450

	$	243,603		$	2,950		$	2,585		$	243,968

At December 31, 2019, the Company’s agency mortgage-backed securities portfolio consisted of FNMA securities totaling $147.6 million, FHLMC securities totaling $13.3 million and GNMA securities totaling $4.1 million. At December 31, 2019, agency collateralized mortgage obligations consisted of GNMA securities totaling $122.7 million, FNMA securities totaling $23.9 million, and FHLMC securities totaling $5.4 million. At December 31, 2019, $144.3 million of the Company’s agency mortgage-backed securities had fixed rates of interest and $20.7 million had variable rates of interest. At December 31, 2019, $149.9 million of the Company’s agency collateralized mortgage obligations had fixed rates of interest and $2.1 million had variable rates of interest.

The amortized cost and fair value of available-for-sale securities at December 31, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

		Amortized			Fair
		Cost			Value
		(In Thousands)

After one through five years	$	—		$	—
After five through ten years		9,253			9,547
After ten years		24,504			25,578
Securities not due on a single maturity date		328,703			339,050

	$	362,460		$	374,175

There were no securities classified as held to maturity at December 31, 2019 or December 31, 2018.

The amortized cost and fair values of securities pledged as collateral was as follows at December 31, 2019 and 2018:

		2019						2018

		Amortized			Fair			Amortized			Fair
		Cost			Value			Cost			Value
		(In Thousands)

Public deposits	$	8,578		$	8,913		$	9,482		$	9,802
Collateralized borrowing accounts		122,771			129,643			148,050			146,337
Other		7,021			7,107			763			761

	$	138,370		$	145,663		$	158,295		$	156,900

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at December 31, 2019 and 2018, was approximately $116.2 million and $95.7 million, respectively, which is approximately 31.1% and 39.2% of the Company’s available-for-sale and held-to-maturity investment portfolio, respectively.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these debt securities are temporary.

The following table shows the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2019 and 2018:

			2019
			Less than 12 Months						12 Months or More						Total
			Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
Description of Securities			Value			Losses			Value			Losses			Value			Losses
			(In Thousands)

Agency mortgage-backed securities		$	—		$	—		$	24,762		$	(265)		$	24,762		$	(265)
Agency collateralized mortgage obligations			69,372			(921)			—			—			69,372			(921)
Small Business Administration securities			22,058			(74)			—			—			22,058			(74)
States and political subdivisions			—			—			—			—			—			—

		$	91,430		$	(995)		$	24,762		$	(265)		$	116,192		$	(1,260)

			2018
			Less than 12 Months						12 Months or More						Total
			Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
Description of Securities			Value			Losses			Value			Losses			Value			Losses
			(In Thousands)

Agency mortgage-backed securities		$	11,255		$	(82)		$	74,186		$	(2,489)		$	85,441		$	(2,571)
Agency collateralized mortgage obligations			9,725			(14)			—			—			9,725			(14)
States and political subdivisions			511			—			—			—			511			—

		$	21,491		$	(96)		$	74,186		$	(2,489)		$	95,677		$	(2,585)

Other-than-Temporary Impairment

Upon acquisition of a security, the Company decides whether it is within the scope of the accounting guidance for beneficial interests in securitized financial assets or will be evaluated for impairment under the accounting guidance for investments in debt and equity securities.

The accounting guidance for beneficial interests in securitized financial assets provides incremental impairment guidance for a subset of the debt securities within the scope of the guidance for investments in debt and equity securities. For securities where the security is a beneficial interest in securitized financial assets, the Company uses the beneficial interests in securitized financial asset impairment model. For securities where the security is not a beneficial interest in securitized financial assets, the Company uses the debt and equity securities impairment model. The Company does not currently have securities within the scope of this guidance for beneficial interests in securitized financial assets.

The Company routinely conducts periodic reviews to identify and evaluate each investment security to determine whether an other-than-temporary impairment has occurred. The Company considers the length of time a security has been in an unrealized loss position, the relative amount of the unrealized loss compared to the carrying value of the security, the type of security and other factors. If certain criteria are met, the Company performs additional review and evaluation using observable market values or various inputs in economic models to determine if an unrealized loss is other than temporary. The Company uses quoted market prices for marketable equity securities and uses broker pricing quotes based on observable inputs for equity investments that are not traded on a stock exchange. For non-agency collateralized mortgage obligations, to determine if the unrealized loss is other than temporary, the Company projects total estimated defaults of the underlying assets (mortgages) and multiplies that calculated amount by an estimate of realizable value upon sale in the marketplace (severity) in order to determine the projected collateral loss. The Company also evaluates any current credit enhancement underlying these securities to determine the impact on cash flows. If the Company determines that a given security position will be subject to a write-down or loss, the Company records the expected credit loss as a charge to earnings.

During 2019, 2018 and 2017, no securities were determined to have impairment that had become other-than-temporary.

Credit Losses Recognized on Investments

During 2019, 2018 and 2017, there were no debt securities that experienced fair value deterioration due to credit losses, as well as due to other market factors, but are not otherwise other-than-temporarily impaired.