Investment Securities

12 Months Ended

Dec. 31, 2021

(4.) 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, 2021
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	15,793		$	195	$	97	$	15,891
Mortgage-backed securities:
Federal National Mortgage Association		576,163			6,565		5,242		577,486
Federal Home Loan Mortgage Corporation		430,010			952		6,435		424,527
Government National Mortgage Association		122,266			298		2,082		120,482
Collateralized mortgage obligations:
Federal National Mortgage Association		15,346			26		433		14,939
Federal Home Loan Mortgage Corporation		25,257			-		477		24,780
Privately issued		-			410		-		410
Total mortgage-backed securities		1,169,042			8,251		14,669		1,162,624
Total available for sale securities	$	1,184,835		$	8,446	$	14,766	$	1,178,515
Securities held to maturity:
State and political subdivisions	$	111,399		$	2,412	$	300	$	113,511
Mortgage-backed securities:
Federal National Mortgage Association		9,275			411		-		9,686
Federal Home Loan Mortgage Corporation		8,706			137		144		8,699
Government National Mortgage Association		27,400			706		2		28,104
Collateralized mortgage obligations:
Federal National Mortgage Association		19,485			368		3		19,850
Federal Home Loan Mortgage Corporation		23,840			565		-		24,405
Government National Mortgage Association		5,481			84		-		5,565
Total mortgage-backed securities		94,187			2,271		149		96,309
Total held to maturity securities		205,586		$	4,683	$	449	$	209,820
Allowance for credit losses - securities		(5	)
Total held to maturity securities, net	$	205,581

December 31, 2020
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	6,239		$	396	$	-	$	6,635
Mortgage-backed securities:
Federal National Mortgage Association		350,627			15,549		44		366,132
Federal Home Loan Mortgage Corporation		225,645			3,155		24		228,776
Government National Mortgage Association		22,107			830		-		22,937
Collateralized mortgage obligations:
Federal National Mortgage Association		3,047			97		-		3,144
Federal Home Loan Mortgage Corporation		-			-		-		-
Privately issued		-			435		-		435
Total mortgage-backed securities		601,426			20,066		68		621,424
Total available for sale securities	$	607,665		$	20,462	$	68	$	628,059

(4.) INVESTMENT SECURITIES (Continued)


	Amortized Cost			Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2020 (continued)
Securities held to maturity:
State and political subdivisions	$	144,506		$	4,478	$	-	$	148,984
Mortgage-backed securities:
Federal National Mortgage Association		10,776			703		-		11,479
Federal Home Loan Mortgage Corporation		5,858			382		-		6,240
Government National Mortgage Association		37,084			1,578		-		38,662
Collateralized mortgage obligations:
Federal National Mortgage Association		29,988			1,075		-		31,063
Federal Home Loan Mortgage Corporation		35,897			1,581		-		37,478
Government National Mortgage Association		7,864			265		-		8,129
Total mortgage-backed securities		127,467			5,584		-		133,051
Total held to maturity securities	$	271,973		$	10,062	$	-	$	282,035
Allowance for credit losses - securities		(7	)
Total held to maturity securities, net	$	271,966

The Company elected to exclude accrued interest receivable (“AIR”) from the amortized cost basis of debt securities disclosed throughout this footnote. For AFS debt securities, AIR totaled $2.1 million and $1.2 million as of December 31, 2021 and December 31, 2020, respectively. For HTM debt securities, AIR totaled $696 thousand and $905 thousand as of December 31, 2021 and December 31, 2020, respectively. AIR is included in other assets on the Company’s consolidated statements of financial condition.

For the years ended December 31, 2021 and 2020, credit loss (credit) expense for HTM investment securities was $(5) thousand and $(7) thousand, respectively.

Investment securities with a total fair value of $637.6 million and $567.4 million at December 31, 2021 and 2020, 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):


	2021		2020		2019
Taxable interest and dividends	$	16,736	$	14,186	$	14,382
Tax-exempt interest and dividends		2,355		3,278		4,150
Total interest and dividends on securities	$	19,091	$	17,464	$	18,532

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


	2021		2020		2019
Proceeds from sales	$	51,891	$	107,098	$	178,059
Gross realized gains		251		1,642		2,391
Gross realized losses		180		43		714

(4.) INVESTMENT SECURITIES (Continued)

The scheduled maturities of securities available for sale and securities held to maturity at December 31, 2021 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	$	1,469	$	1,479
Due from one to five years		64,526		66,843
Due after five years through ten years		178,918		182,096
Due after ten years		939,922		928,097
Total available for sale securities	$	1,184,835	$	1,178,515
Debt securities held to maturity:
Due in one year or less	$	35,419	$	35,700
Due from one to five years		68,054		70,227
Due after five years through ten years		19,209		19,414
Due after ten years		82,904		84,479
Total held to maturity securities	$	205,586	$	209,820

(4.) INVESTMENT SECURITIES (Continued)

Unrealized losses on investment securities for which an allowance for credit losses has not been recorded 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, 2021
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	9,438	$	97	$	-	$	-	$	9,438	$	97
Mortgage-backed securities:
Federal National Mortgage Association		333,489		3,597		61,249		1,645		394,738		5,242
Federal Home Loan Mortgage Corporation		283,965		3,353		110,931		3,082		394,896		6,435
Government National Mortgage Association		108,448		2,082		-		-		108,448		2,082
Collateralized mortgage obligations:
Federal National Mortgage Association		13,364		433		-		-		13,364		433
Federal Home Loan Mortgage Corporation		24,780		477		-		-		24,780		477
Total mortgage-backed securities		764,046		9,942		172,180		4,727		936,226		14,669
Total available for sale securities		773,484		10,039		172,180		4,727		945,664		14,766
Total temporarily impaired securities	$	773,484	$	10,039	$	172,180	$	4,727	$	945,664	$	14,766
December 31, 2020
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	-	$	-	$	-	$	-	$	-	$	-
Mortgage-backed securities:
Federal National Mortgage Association		18,155		44		-		-		18,155		44
Federal Home Loan Mortgage Corporation		10,932		24		-		-		10,932		24
Government National Mortgage Association		-		-		-		-		-		-
Collateralized mortgage obligations:
Federal National Mortgage Association		-		-		8		-		8		-
Federal Home Loan Mortgage Corporation		-		-		-		-		-		-
Privately issued		-		-		-		-		-		-
Total mortgage-backed securities		29,087		68		8		-		29,095		68
Total available for sale securities		29,087		68		8		-		29,095		68
Total temporarily impaired securities	$	29,087	$	68	$	8	$	-	$	29,095	$	68

(4.) INVESTMENT SECURITIES (Continued)

The total number of security positions, for which an allowance for credit losses has not been recorded, in the investment portfolio in an unrealized loss position at December 31, 2021 was 116 compared to eight at December 31, 2020. At December 31, 2021, the Company had a position in 28 investment securities with a fair value of $172.2 million dollars and a total unrealized loss of $4.7 million dollars that has been in a continuous unrealized loss position for more than 12 months. At December 31, 2021, there were a total of 88 securities positions in the Company’s investment portfolio with a fair value of $773.5 million and a total unrealized loss of $10.0 million that had been in a continuous unrealized loss position for less than 12 months. At December 31, 2020, the Company had a position in one investment security with a fair value of eight thousand dollars and a total unrealized loss of less than one thousand dollars that has been in a continuous unrealized loss position for more than 12 months. At December 31, 2020, there were a total of seven securities positions in the Company’s investment portfolio with a fair value of $29.1 million and a total unrealized loss of $68 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.

Securities Available for Sale

As of December 31, 2021, no allowance for credit losses has been recognized on available for sale securities in an unrealized loss position as management does not believe any of the securities are impaired due to reasons of credit quality. This is based upon our analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors related to our available for sale securities and in consideration of our historical credit loss experience and internal forecasts. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. Furthermore, management does not have the intent to sell any of the securities classified as available for sale in the table above and believes that it is more likely than not that we will not have to sell any such securities before a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

Securities Held to Maturity

The Company’s HTM investment securities include debt securities that are 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. In addition, the Company’s HTM investment securities include debt securities that are issued by state and local government agencies, or municipal bonds.

The Company monitors the credit quality of our municipal bonds through the use of a credit rating agency or by ratings that are derived by an internal scoring model. The scoring methodology for the internally derived ratings is based on a series of financial ratios for the municipality being reviewed as compared to typical industry figures. This information is used to determine the financial strengths and weaknesses of the municipality, which is indicated with a numeric rating. This number is then converted into a letter rating to better match the system used by the credit rating agencies. As of December 31, 2021, $105.6 million of our municipal bonds were rated as an equivalent to Standard & Poor’s A/AA/AAA, with $5.8 million internally rated to be the equivalent of Standard & Poor’s A/AA/AAA rating. Additionally, no municipal bonds were rated below investment grade. As of December 31, 2020, $135.7 million of our municipal bonds were rated as an equivalent to Standard & Poor’s A/AA/AAA, with $8.5 million internally rated to be the equivalent of Standard & Poor’s A/AA/AAA rating. Additionally, as of December 31, 2020, one municipal bond was rated below investment grade, with a BB+ Standard & Poor’s equivalent rating. The below investment grade bond represented exposure of $279 thousand, or 0.19% of the municipal bond portfolio and had been closely monitored for repayment.

As of December 31, 2021, the Company had no past due or nonaccrual held to maturity investment securities.