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SECURITIES AVAILABLE FOR SALE

3 Months Ended

Mar. 31, 2021

SECURITIES AVAILABLE FOR SALE

SECURITIES AVAILABLE FOR SALE

NOTE 2. SECURITIES AVAILABLE FOR SALE

The following is a summary of securities available for sale:


					Gross			Gross
					Unrealized			Unrealized
(in thousands)		Amortized Cost			Gains			Losses			Fair Value
March 31, 2021
Mortgage-backed securities:
US Government-sponsored enterprises		$	213,049		$	4,860		$	(3,302)		$	214,607
US Government agency			74,293			2,211			(319)			76,185
Private label			47,576			111			(146)			47,541
Obligations of states and political subdivisions thereof			185,985			3,081			(1,203)			187,863
Corporate bonds			99,616			1,560			(969)			100,207
Total securities available for sale		$	620,519		$	11,823		$	(5,939)		$	626,403


					Gross			Gross
					Unrealized			Unrealized
(in thousands)		Amortized Cost			Gains			Losses			Fair Value
December 31, 2020
Mortgage-backed securities:
US Government-sponsored enterprises		$	206,834		$	6,018		$	(462)		$	212,390
US Government agency			82,878			2,870			(116)			85,632
Private label			19,810			40			(141)			19,709
Obligations of states and political subdivisions thereof			164,766			4,244			(6)			169,004
Corporate bonds			97,689			1,465			(843)			98,311
Total securities available for sale		$	571,977		$	14,637		$	(1,568)		$	585,046

Credit Quality Information

The Company monitors the credit quality of available for sale debt securities through credit ratings from various rating agencies and substantial price changes. Credit ratings express opinions about the credit quality of a security and are utilized by the Company to make informed decisions. Securities are triggered for further review in the quarter if the security has significant fluctuations in ratings, drops below investment grade, or significant pricing changes. For securities without credit ratings, the Company utilizes other financial information indicating the financial health of the underlying municipality, agency, or organization associated with the underlying security.

As of March 31, 2021 the Company carried no allowance on available for sale debt securities in accordance with ASU 2016-13.

The amortized cost and estimated fair value of available for sale (“AFS”) securities segregated by contractual maturity at March 31, 2021 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.


		Available for sale
(in thousands)		Amortized Cost			Fair Value
Within 1 year		$	4,776		$	4,848
Over 1 year to 5 years			20,745			20,965
Over 5 years to 10 years			75,062			73,650
Over 10 years			185,018			188,607
Total bonds and obligations			285,601			288,070
Mortgage-backed securities			334,918			338,333
Total securities available for sale		$	620,519		$	626,403

The following table presents the gains and losses from the sale of AFS securities for the periods presented:


		Three Months Ended
		March 31,
(in thousands)		2021			2020
Gross gains on sales of available for sale securities		$	—		$	146
Gross losses on sales of available for sale securities			—			(11)
Net gains on sale of available for sale securities		$	—		$	135

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:


		Less Than Twelve Months						Over Twelve Months						Total
		Gross						Gross						Gross
		Unrealized			Fair			Unrealized			Fair			Unrealized			Fair
(in thousands)		Losses			Value			Losses			Value			Losses			Value
March 31, 2021
Mortgage-backed securities:
US Government-sponsored enterprises		$	3,073		$	96,384		$	229		$	3,803		$	3,302		$	100,187
US Government agency			300			14,716			19			4,204			319			18,920
Private label			2			15,822			144			19,257			146			35,079
Obligations of states and political subdivisions thereof			1,203			56,813			—			—			1,203			56,813
Corporate bonds			128			14,622			841			19,158			969			33,780
Total securities available for sale		$	4,706		$	198,357		$	1,233		$	46,422		$	5,939		$	244,779


		Less Than Twelve Months						Over Twelve Months						Total
		Gross						Gross						Gross
		Unrealized			Fair			Unrealized			Fair			Unrealized			Fair
(in thousands)		Losses			Value			Losses			Value			Losses			Value
December 31, 2020
Mortgage-backed securities:
US Government-sponsored enterprises		$	209		$	40,285		$	253		$	4,323		$	462		$	44,608
US Government agency			45			6,776			71			3,297			116			10,073
Private label			—			—			141			19,514			141			19,514
Obligations of states and political subdivisions thereof			6			5,577			—			—			6			5,577
Corporate bonds			555			21,774			288			11,712			843			33,486
Total securities available for sale		$	815		$	74,412		$	753		$	38,846		$	1,568		$	113,258

The Company expects to recover its amortized cost basis on all securities in its AFS portfolio. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of March 31, 2021, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover.

The following summarizes, by investment security type, the impact of securities in an unrealized loss position for greater than 12 months at March 31, 2021:

US Government-sponsored enterprises

50 out of the total 556 securities in the Company’s portfolios of AFS US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 1.55% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association and Federal Home Loan Mortgage Corporation guarantee the contractual cash flows of all of the Company’s US Government-sponsored enterprises. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

US Government agency

13 out of the total 158 securities in the Company’s portfolios of AFS US Government agency securities were in unrealized loss positions. Aggregate unrealized losses represented 0.43% of the amortized cost of securities in unrealized loss positions. The Government National Mortgage Association guarantees the contractual cash flows of all of the Company’s US Government agency securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

Private label

12 of the total 29 securities in the Company’s portfolio of AFS private label mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 0.31% of the amortized cost of securities in unrealized loss positions. Based upon the expectation that the Company will receive all of the future contractual cash flows related to the amortized cost on these securities, the Company does not consider there to be any additional other-than-temporary impairment with respect to these securities.

Obligations of states and political subdivisions thereof

16 of the total 144 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.65% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for the risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

Corporate bonds

8 out of the total 33 securities in the Company’s portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 0.97% of the amortized cost of bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities. The most recent review includes all bond issuers and their current credit ratings, financial performance and capitalization.