Investment Securities

12 Months Ended

Dec. 31, 2019

(3.)	INVESTMENT SECURITIES

The amortized cost and fair value of investment securities are summarized below (in thousands).

	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2019
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	26,440	$	437	$	-	$	26,877
Mortgage-backed securities:
Federal National Mortgage Association		293,873		2,263		1,380		294,756
Federal Home Loan Mortgage Corporation		52,733		318		172		52,879
Government National Mortgage Association		14,065		60		4		14,121
Collateralized mortgage obligations:
Federal National Mortgage Association		23,834		-		57		23,777
Federal Home Loan Mortgage Corporation		4,907		-		18		4,889
Privately issued		-		618		-		618
Total mortgage-backed securities		389,412		3,259		1,631		391,040
Total available for sale securities	$	415,852	$	3,696	$	1,631	$	417,917
Securities held to maturity:
State and political subdivisions	$	192,215	$	3,803	$	-	$	196,018
Mortgage-backed securities:
Federal National Mortgage Association		12,049		227		6		12,270
Federal Home Loan Mortgage Corporation		6,995		77		47		7,025
Government National Mortgage Association		45,758		306		128		45,936
Collateralized mortgage obligations:
Federal National Mortgage Association		41,561		150		256		41,455
Federal Home Loan Mortgage Corporation		49,389		307		103		49,593
Government National Mortgage Association		11,033		12		83		10,962
Total mortgage-backed securities		166,785		1,079		623		167,241
Total held to maturity securities	$	359,000	$	4,882	$	623	$	363,259

December 31, 2018
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	155,102	$	-	$	3,074	$	152,028
Mortgage-backed securities:
Federal National Mortgage Association		258,984		44		6,325		252,703
Federal Home Loan Mortgage Corporation		35,962		13		1,275		34,700
Government National Mortgage Association		5,364		21		76		5,309
Collateralized mortgage obligations:
Federal National Mortgage Association		133		-		-		133
Federal Home Loan Mortgage Corporation		37		-		-		37
Privately issued		-		767		-		767
Total mortgage-backed securities		300,480		845		7,676		293,649
Total available for sale securities	$	455,582	$	845	$	10,750	$	445,677

(3.)	INVESTMENT SECURITIES (Continued)

	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2018 (continued)
Securities held to maturity:
State and political subdivisions	$	234,845	$	876	$	1,211	$	234,510
Mortgage-backed securities:
Federal National Mortgage Association		11,602		8		261		11,349
Federal Home Loan Mortgage Corporation		4,583		-		193		4,390
Government National Mortgage Association		37,450		14		923		36,541
Collateralized mortgage obligations:
Federal National Mortgage Association		62,103		1		2,179		59,925
Federal Home Loan Mortgage Corporation		78,200		-		2,597		75,603
Government National Mortgage Association		17,798		-		535		17,263
Total mortgage-backed securities		211,736		23		6,688		205,071
Total held to maturity securities	$	446,581	$	899	$	7,899	$	439,581

Investment securities with a total fair value of $676.9 million and $751.0 million at December 31, 2019 and 2018, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

Interest and dividends on securities for the years ended December 31 are summarized as follows (in thousands):

	2019		2018		2017
Taxable interest and dividends	$	14,382	$	16,510	$	17,886
Tax-exempt interest and dividends		4,150		5,091		5,869
Total interest and dividends on securities	$	18,532	$	21,601	$	23,755

Sales of securities available for sale for the years ended December 31 were as follows (in thousands):

	2019		2018		2017
Proceeds from sales	$	178,059	$	29,851	$	50,084
Gross realized gains		2,391		73		1,266
Gross realized losses		714		200		6

(3.)	INVESTMENT SECURITIES (Continued)

The scheduled maturities of securities available for sale and securities held to maturity at December 31, 2019 are shown below (in thousands). Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

	Amortized Cost		Fair Value
Debt securities available for sale:
Due in one year or less	$	-	$	-
Due from one to five years		64,382		65,028
Due after five years through ten years		167,809		168,755
Due after ten years		183,661		184,134
Total available for sale securities	$	415,852	$	417,917
Debt securities held to maturity:
Due in one year or less	$	54,606	$	54,937
Due from one to five years		124,235		127,172
Due after five years through ten years		34,838		35,494
Due after ten years		145,321		145,656
Total held to maturity securities	$	359,000	$	363,259

(3.)	INVESTMENT SECURITIES (Continued)

Unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31 are summarized as follows (in thousands):

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2019
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	-	$	-	$	-	$	-	$	-	$	-
Mortgage-backed securities:
Federal National Mortgage Association		104,634		1,277		7,196		103		111,830		1,380
Federal Home Loan Mortgage Corporation		10,347		11		9,409		161		19,756		172
Government National Mortgage Association		533		4		-		-		533		4
Collateralized mortgage obligations:
Federal National Mortgage Association		8,803		57		8		-		8,811		57
Federal Home Loan Mortgage Corporation		4,889		18		-		-		4,889		18
Total mortgage-backed securities		129,206		1,367		16,613		264		145,819		1,631
Total available for sale securities		129,206		1,367		16,613		264		145,819		1,631
Securities held to maturity:
State and political subdivisions		-		-		-		-		-		-
Mortgage-backed securities:
Federal National Mortgage Association		2,388		6		-		-		2,388		6
Federal Home Loan Mortgage Corporation		2,967		19		2,598		28		5,565		47
Government National Mortgage Association		11,155		61		5,625		67		16,780		128
Collateralized mortgage obligations:
Federal National Mortgage Association		9,120		40		13,486		216		22,606		256
Federal Home Loan Mortgage Corporation		15,127		30		7,988		73		23,115		103
Government National Mortgage Association		8,760		72		892		11		9,652		83
Total mortgage-backed securities		49,517		228		30,589		395		80,106		623
Total held to maturity securities		49,517		228		30,589		395		80,106		623
Total temporarily impaired securities	$	178,723	$	1,595	$	47,202	$	659	$	225,925	$	2,254

December 31, 2018
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	-	$	-	$	152,028	$	3,074	$	152,028	$	3,074
Mortgage-backed securities:
Federal National Mortgage Association		251		1		247,615		6,324		247,866		6,325
Federal Home Loan Mortgage Corporation		-		-		33,918		1,275		33,918		1,275
Government National Mortgage Association		-		-		4,667		76		4,667		76
Collateralized mortgage obligations:
Federal National Mortgage Association		-		-		56		-		56		-
Federal Home Loan Mortgage Corporation		-		-		6		-		6		-
Total mortgage-backed securities		251		1		286,262		7,675		286,513		7,676
Total available for sale securities		251		1		438,290		10,749		438,541		10,750

(3.)	INVESTMENT SECURITIES (Continued)

	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
December 31, 2018 (continued)
Securities held to maturity:
State and political subdivisions		35,751		91		49,534		1,120		85,285		1,211
Mortgage-backed securities:
Federal National Mortgage Association		1,518		3		8,695		258		10,213		261
Federal Home Loan Mortgage Corporation		1,467		5		2,923		188		4,390		193
Government National Mortgage Association		11,783		82		22,516		841		34,299		923
Collateralized mortgage obligations:
Federal National Mortgage Association		-		-		57,973		2,179		57,973		2,179
Federal Home Loan Mortgage Corporation		-		-		75,603		2,597		75,603		2,597
Government National Mortgage Association		-		-		17,263		535		17,263		535
Total mortgage-backed securities		14,768		90		184,973		6,598		199,741		6,688
Total held to maturity securities		50,519		181		234,507		7,718		285,026		7,899
Total temporarily impaired securities	$	50,770	$	182	$	672,797	$	18,467	$	723,567	$	18,649

The total number of security positions in the investment portfolio in an unrealized loss position at December 31, 2019 was 91 compared to 571 at December 31, 2018. At December 31, 2019, the Company had positions in 34 investment securities with a fair value of $47.2 million and a total unrealized loss of $659 thousand that have been in a continuous unrealized loss position for more than 12 months. At December 31, 2019, there were a total of 57 securities positions in the Company’s investment portfolio with a fair value of $178.7 million and a total unrealized loss of $1.6 million that had been in a continuous unrealized loss position for less than 12 months. At December 31, 2018, the Company had positions in 435 investment securities with a fair value of $672.8 million and a total unrealized loss of $18.5 million that have been in a continuous unrealized loss position for more than 12 months. At December 31, 2018, there were a total of 136 securities positions in the Company’s investment portfolio with a fair value of $50.8 million and a total unrealized loss of $182 thousand that had been in a continuous unrealized loss position for less than 12 months. The unrealized loss on investment securities was predominantly caused by changes in market interest rates subsequent to purchase. The fair value of most of the investment securities in the Company’s portfolio fluctuates as market interest rates change.

The Company reviews investment securities on an ongoing basis for the presence of other than temporary impairment (“OTTI”) with formal reviews performed quarterly. When evaluating debt securities for OTTI, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intention to sell the debt security or whether it is more likely than not that it will be required to sell the debt security before its anticipated recovery. The assessment of whether OTTI exists involves a high degree of subjectivity and judgment and is based on the information then available to management. There was no impairment recorded during the years ended December 31, 2019, 2018 and 2017.

Based on management’s review and evaluation of the Company’s debt securities as of December 31, 2019, the debt securities with unrealized losses were not considered to be OTTI. As of December 31, 2019, the Company did not intend to sell any of the securities in a loss position and believes that it is not likely that it will be required to sell any such securities before the anticipated recovery of amortized cost. Accordingly, as of December 31, 2019, management has concluded that unrealized losses on its investment securities are temporary and no further impairment loss has been realized in the Company’s consolidated statements of income.