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Investment Securities Available-for-Sale

12 Months Ended

Dec. 31, 2019

Investment Securities Available-for-Sale

Investment Securities Available-for-Sale

Note 3 – Investment Securities Available-for-Sale

Amortized cost and estimated fair value of securities available-for-sale are summarized as follows:


					Gross			Gross			Estimated
December 31, 2019		Amortized			Unrealized			Unrealized			Fair
(dollars in thousands)		Cost			Gains			Losses			Value
U. S. agency securities		$	180,228		$	621	#	$	1,055		$	179,794
Residential mortgage backed securities			541,490			4,337			1,975			543,852
Municipal bonds			71,902			2,034			5			73,931
Corporate bonds			10,530			203			—			10,733
U.S. Treasury			34,844			11			—			34,855
Other equity investments			198			—			—			198
		$	839,192		$	7,206		$	3,035		$	843,363


					Gross			Gross			Estimated
December 31, 2018		Amortized			Unrealized			Unrealized			Fair
(dollars in thousands)		Cost			Gains			Losses			Value
U. S. agency securities		$	260,150		$	228	#	$	4,033		$	256,345
Residential mortgage backed securities			477,949			1,575			7,293			472,231
Municipal bonds			45,814			439			484			45,769
Corporate bonds			9,503			79			6			9,576
Other equity investments			218			—			—			218
		$	793,634		$	2,321		$	11,816		$	784,139

In addition, at December 31, 2019 and December 31, 2018, the Company held $35.2 million and $23.5 million in equity securities, respectively, in a combination of Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) stocks, which are required to be held for regulatory purposes and which are not marketable, and therefore are carried at cost.

The unrealized losses that exist are generally the result of changes in market interest rates and interest spread relationships since original purchases. The weighted average duration of debt securities, which comprise 99.9% of total investment securities, is relatively short at 3.4 years. If quoted prices are not available, fair value is measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. The Company does not believe that the investment securities that were in an unrealized loss position as of December 31, 2019 represent an other-than-temporary impairment. The Company does not intend to sell the investments and it is more likely than not that the Company will not have to sell the securities before recovery of its amortized cost basis, which may be at maturity.

Gross unrealized losses and fair value by length of time that the individual available-for-sale securities have been in a continuous unrealized loss position as of December 31, 2019 and 2018 are as follows:


				Less than						12 Months
				12 Months						or Greater						Total
				Estimated						Estimated						Estimated
December 31, 2019		Number of		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
(dollars in thousands)		Securities		Value			Losses			Value			Losses			Value			Losses
U. S. agency securities		36		$	75,159		$	439		$	51,481		$	616		$	126,640		$	1,055
Residential mortgage backed securities		111			197,794			1,148			90,742			827			288,536			1,975
Municipal bonds		1			1,994			5			—			—			1,994			5
		148		$	274,947		$	1,592		$	142,223		$	1,443		$	417,170		$	3,035


				Less than						12 Months
				12 Months						or Greater						Total
				Estimated						Estimated						Estimated
December 31, 2018		Number of		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
(dollars in thousands)		Securities		Value			Losses			Value			Losses			Value			Losses
U. S. agency securities		58		$	72,679		$	533		$	144,636		$	3,500		$	217,315		$	4,033
Residential mortgage backed securities		151			61,199			527			225,995			6,766			287,194			7,293
Municipal bonds		11			4,299			50			17,041			434			21,340			484
Corporate bonds		1			1,494			6			—			—			1,494			6
		221		$	139,671		$	1,116		$	387,672		$	10,700		$	527,343		$	11,816

The amortized cost and estimated fair value of investments available-for-sale at December 31, 2019 and 2018 by contractual maturity are shown in the table below. Expected maturities for residential mortgage backed securities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


		December 31, 2019						December 31, 2018
		Amortized			Estimated			Amortized			Estimated
(dollars in thousands)		Cost			Fair Value			Cost			Fair Value
U. S. agency securities maturing:
One year or less		$	96,332		$	96,226		$	128,148		$	125,545
After one year through five years			76,121			75,821			119,856			118,883
Five years through ten years			7,775			7,747			12,146			11,917
Residential mortgage backed securities			541,490			543,852			477,949			472,231
Municipal bonds maturing:
One year or less			5,897			5,969			8,097			8,167
After one year through five years			21,416			21,953			15,025			15,081
Five years through ten years			42,589			44,015			21,626			21,385
After ten years			2,000			1,994			1,066			1,136
Corporate bonds maturing:
One year or less			502			508			—			—
After one year through five years			8,528			8,725			8,003			8,076
After ten years			1,500			1,500			1,500			1,500
U.S. treasury			34,844			34,855			—			—
Other equity investments			198			198			218			218
		$	839,192		$	843,363		$	793,634		$	784,139

In 2019, gross realized gains on sales of investment securities were $1.7 million and gross realized losses on sales of investment securities were $153 thousand. In 2018, gross realized gains on sales of investment securities were $391 thousand and gross realized losses on sales of investment securities were $294 thousand. In 2017, gross realized gains on sales of investment securities were $796 thousand and gross realized losses on sales of investment securities were $254 thousand.

Proceeds from sales and calls of investment securities for 2019, 2018 and 2017 were $104.8 million, $36.3 million, and $73.1 million, respectively.

The carrying value of securities pledged as collateral for certain government deposits, securities sold under agreements to repurchase, and certain lines of credit with correspondent banks at December 31, 2019 was $378 million, which is well in excess of required amounts in order to operationally provide significant reserve amounts for new business. As of December 31, 2019 and December 31, 2018, there were no holdings of securities of any one issuer, other than the U.S. Government and U.S. agency securities, which exceeded ten percent of shareholders’ equity.