Debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and recorded at amortized cost. Debt securities not classified as held to maturity or trading are classified as “available for sale” and recorded at fair value, with unrealized gains and losses excluded from earnings and reported,

Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in the fair value of held to maturity and available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses on debt securities, management considers (1) whether management intends to sell the security, or (2) if it is more likely than not that management will be required to sell the security before recovery, or (3) if management does not expect to recover the entire amortized cost basis. In assessing potential other-than-temporary impairment for equity securities, consideration is given to management’s intention and ability to hold the securities until recovery of unrealized losses. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.


In thousands	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

SECURITIES AVAILABLE FOR SALE

SEPTEMBER 30, 2021
U.S. Government and agencies	$	225,315	$	825	$	2,971	$	223,169
Mortgage-backed securities, residential	132,074		2,124		1,199		132,999
State and municipal	42,891		259		440		42,710
Corporate bonds	12,621		198		21		12,798
	$	412,901	$	3,406	$	4,631	$	411,676

DECEMBER 31, 2020
U.S. Government and agencies	$	181,704	$	2,117	$	218	$	183,603
Mortgage-backed securities, residential	105,327		3,529		34		108,822
State and municipal	35,930		561		7		36,484
Corporate bonds	8,784		41		16		8,809
	$	331,745	$	6,248	$	275	$	337,718

SECURITIES HELD TO MATURITY

SEPTEMBER 30, 2021

Mortgage-backed securities, residential	$	7,220	$	262	$	—	$	7,482
	$	7,220	$	262	$	—	$	7,482
DECEMBER 31, 2020

Mortgage-backed securities, residential	$	10,294	$	474	$	—	$	10,768
	$	10,294	$	474	$	—	$	10,768


In thousands	Fair Value at January 1, 2021		Unrealized Gains		Unrealized Losses		Fair Value at September 30, 2021
SEPTEMBER 30, 2021
CRA Mutual Fund	$	1,065	$	—	$	20	$	1,045
Stock in other banks	1,105		397		—		1,502
	$	2,170	$	397	$	20	$	2,547


In thousands	Fair Value at January 1, 2020		Unrealized Gains		Unrealized Losses		Fair Value at September 30, 2020
SEPTEMBER 30, 2020
CRA Mutual Fund	$	1,045	$	25	$	—	$	1,070
Stock in other banks	1,318		—		508		810
	$	2,363	$	25	$	508	$	1,880


In thousands	Fair Value at January 1, 2020		Unrealized Gains		Unrealized Losses		Fair Value at December 31, 2020
DECEMBER 31, 2020
CRA Mutual Fund	$	1,045	$	25	$	5	$	1,065
Stock in other banks	1,318		—		213		1,105
	$	2,363	$	25	$	218	$	2,170

The following table shows the Corporation’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2021, and December 31, 2020:


	Less than 12 Months				12 Months or More				Total
In thousands	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

SECURITIES AVAILABLE FOR SALE

SEPTEMBER 30, 2021
U.S. Government and agencies	$	148,047	$	2,469	$	15,014	$	502	$	163,061	$	2,971
Mortgage-backed securities, residential	75,394		1,144		2,713		55		78,107		1,199
State and municipal	22,384		415		901		25		23,285		440
Corporate bond	4,344		21		—		—		4,344		21
	$	250,169	$	4,049	$	18,628	$	582	$	268,797	$	4,631

DECEMBER 31, 2020
U.S. Government and agencies	$	32,629	$	218	$	—	$	—	$	32,629	$	218
Mortgage-backed securities, residential	10,458		34		—		—		10,458		34
State and municipal	2,148		7		—		—		2,148		7
Corporate bond	1,514		16		—		—		1,514		16
	$	46,749	$	275	$	—	$	—	$	46,749	$	275

SECURITIES HELD TO MATURITY

SEPTEMBER 30, 2021

Mortgage-backed securities, residential	$	—	$	—	$	—	$	—	$	—	$	—
	$	—	$	—	$	—	$	—	$	—	$	—

DECEMBER 31, 2020

Mortgage-backed securities, residential	$	—	$	—	$	—	$	—	$	—	$	—
	$	—	$	—	$	—	$	—	$	—	$	—

All mortgage-backed security investments are government sponsored enterprise (GSE) pass-through instruments issued by the Federal National Mortgage Association (FNMA), Government National Mortgage Association (GNMA) or Federal Home Loan Mortgage Corporation (FHLMC), which guarantee the timely payment of principal on these investments.

At September 30, 2021, sixty-seven available for sale U.S. Government and agency securities had unrealized losses that individually did not exceed 6% of amortized cost. Eight of these securities have been in a continuous loss position for 12 months or more. These unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.

At September 30, 2021, thirty-nine available for sale residential mortgage-backed securities had unrealized losses that individually did not exceed 5% of amortized cost. Three of these securities have been in a continuous loss position for 12 months or more. These unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.

At September 30, 2021, thirty-six available for sale state and municipal securities had unrealized losses that individually did not exceed 6% of amortized cost. Two of these securities have been in a continuous loss position for

At September 30, 2021, five corporate bonds had unrealized losses that individually did not exceed 2% of amortized cost. None of these securities have been in a continuous loss position for 12 months or more. These unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.

In analyzing the issuer’s financial condition, management considers industry analysts’ reports, financial performance, and projected target prices of investment analysts within a one-year time frame. Based on the above information, management has determined that none of these investments are other-than-temporarily impaired.

The fair values of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2) which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the security’s relationship to other benchmark quoted prices. The Corporation uses independent service providers to provide matrix pricing.

Management routinely sells securities from its available for sale portfolio in an effort to manage and allocate the portfolio. At September 30, 2021, management had not identified any securities with an unrealized loss that it intends to sell or will be required to sell. In estimating other-than-temporary impairment losses on debt securities, management considers (1) whether management intends to sell the security, or (2) if it is more likely than not that management will be required to sell the security before recovery, or (3) if management does not expect to recover the entire amortized cost basis. In assessing potential other-than-temporary impairment for equity securities, consideration is given to management’s intention and ability to hold the securities until recovery of unrealized losses.

Amortized cost and fair value at September 30, 2021, by contractual maturity, where applicable, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay with or without penalties.


	Available for Sale				Held to Maturity
In thousands	Amortized Cost		Fair Value		Amortized Cost		Fair Value

1 year or less	$	29,292	$	29,505	$	—	$	—
Over 1 year through 5 years	67,854		68,105		—		—
Over 5 years through 10 years	136,154		134,047		—		—
Over 10 years	47,527		47,020		—		—
Mortgage-backed securities, residential	132,074		132,999		7,220		7,482
	$	412,901	$	411,676	$	7,220	$	7,482

At September 30, 2021, and December 31, 2020, securities with a carrying value of $362,378,000 and $301,201,000, respectively, were pledged as collateral as required by law on public and trust deposits, repurchase agreements, and for other purposes.