XML 53 R10.htm IDEA: XBRL DOCUMENT

Investment Securities Available-for-Sale

3 Months Ended

Mar. 31, 2020

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
March 31, 2020		Amortized			Unrealized			Unrealized			Fair
(dollars in thousands)		Cost			Gains			Losses			Value
U. S. agency securities		$	146,948		$	1,527		$	716		$	147,759
Residential mortgage backed securities			531,784			16,110			506			547,388
Municipal bonds			72,828			2,760			—			75,588
Corporate bonds			52,087			969			72			52,984
U.S. Treasury			34,986			13			—			34,999
Other equity investments			198			—			—			198
		$	838,831		$	21,379		$	1,294		$	858,916


					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

In addition, at March 31, 2020 and December 31, 2019 the Company held $40.0 million and $35.2 million, respectively, in equity securities 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.

Accrued interest on available for sale securities totaled $3.4 million and $3.2 million at March 31, 2020 and December 31, 2019, respectively, and was included in other assets in the consolidated balance sheets.

Gross unrealized losses and fair value of available-for-sale securities for which an allowance for credit losses has not been recorded, by length of time that individual securities have been in a continuous unrealized loss position are as follows:


				Less than						12 Months
				12 Months						or Greater						Total
				Estimated						Estimated						Estimated
March 31, 2020		Number of		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
(dollars in thousands)		Securities		Value			Losses			Value			Losses			Value			Losses
U. S. agency securities		23		$	13,835		$	162		$	39,486		$	554		$	53,321		$	716
Residential mortgage backed securities		11			18,321			275			7,888			231			26,209			506
Corporate bonds		1			2,955			72			—			—			2,955			72
		35		$	35,111		$	509		$	47,374		$	785		$	82,485		$	1,294


				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

The majority of the AFS debt securities in an unrealized loss position as of March 31, 2020, consisted of debt securities issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit loss.

As of March 31, 2020 total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. The weighted average duration of debt securities, which comprise 99.9% of total investment securities, is relatively short at 2.6 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 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.

The amortized cost and estimated fair value of investments available-for-sale at March 31, 2020 and December 31, 2019 by contractual maturity are shown in the table below. Expected maturities for residential mortgage backed securities (“MBS”) will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


		March 31, 2020						December 31, 2019
		Amortized			Estimated			Amortized			Estimated
(dollars in thousands)		Cost			Fair Value			Cost			Fair Value
U. S. agency securities maturing:
One year or less		$	61,706		$	62,055		$	96,332		$	96,226
After one year through five years			80,513			81,106			76,121			75,821
Five years through ten years			4,729			4,598			7,775			7,747
Residential mortgage backed securities			531,784			547,388			541,490			543,852
Municipal bonds maturing:
One year or less			6,400			6,456			5,897			5,969
After one year through five years			20,844			21,437			21,416			21,953
Five years through ten years			43,584			45,656			42,589			44,015
After ten years			2,000			2,039			2,000			1,994
Corporate bonds maturing:
One year or less			10,972			11,054			502			508
After one year through five years			35,891			36,600			8,528			8,725
After ten years			5,224			5,330			1,500			1,500
U.S. treasury			34,986			34,999			34,844			34,855
Other equity investments			198			198			198			198
		$	838,831		$	858,916		$	839,192		$	843,363

For the three months ended March 31, 2020, gross realized gains on sales of investments securities were $822 thousand and there were no gross realized losses on sales of investment securities. For the three months ended March 31, 2019, gross realized gains on sales of investments securities were $912 thousand and there were no gross realized losses on sales of investment securities.

Proceeds from sales and calls of investment securities for the three months ended March 31, 2020 were $78.0 million compared to $22.8 million for the same period in 2019.

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 March 31, 2020 and December 31, 2019 was $364 million and $378 million, respectively, which is well in excess of required amounts in order to operationally provide significant reserve amounts for new business. As of March 31, 2020 and December 31, 2019, 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.