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Investments
 9 Months Ended
Sep. 30, 2020
Investments [Abstract]  
Investments Note 5 – Investments

The following table shows a comparison of amortized cost and fair values of investment securities at September 30, 2020 and December 31, 2019:

(in thousands)

Amortized
‎Cost

Gross
‎Unrealized
‎Gains

Gross
‎Unrealized
‎Losses

Fair
‎Value

OTTI
‎in AOCL

September 30, 2020

Available for Sale:

U.S. government agencies

$

65,942

$

959

$

30

$

66,871

$

—

Residential mortgage-backed agencies

13,037

219

93

13,163

—

Commercial mortgage-backed agencies

33,566

608

14

34,160

—

Collateralized mortgage obligations

15,226

392

—

15,618

—

Obligations of states and political subdivisions

10,159

430

—

10,589

—

Collateralized debt obligations

18,525

—

5,765

12,760

(4,235)

Total available for sale

$

156,455

$

2,608

$

5,902

$

153,161

$

(4,235)

Held to Maturity:

Residential mortgage-backed agencies

$

34,868

$

1,157

$

—

$

36,025

$

—

Commercial mortgage-backed agencies

11,773

615

—

12,388

—

Collateralized mortgage obligations

1,821

98

—

1,919

—

Obligations of states and political subdivisions

20,759

5,279

—

26,038

—

Total held to maturity

$

69,221

$

7,149

$

—

$

76,370

$

—

December 31, 2019

Available for Sale:

U.S. government agencies

$

39,987

$

—

$

93

$

39,894

$

—

Residential mortgage-backed agencies

4,917

—

17

4,900

—

Commercial mortgage-backed agencies

27,634

222

92

27,764

—

Collateralized mortgage obligations

29,903

129

109

29,923

—

Obligations of states and political subdivisions

14,124

346

—

14,470

—

Collateralized debt obligations

18,443

—

4,089

14,354

(2,835)

Total available for sale

$

135,008

$

697

$

4,400

$

131,305

$

(2,835)

Held to Maturity:

U.S. government agencies

$

16,164

$

659

$

—

$

16,823

$

—

Residential mortgage-backed agencies

42,939

469

155

43,253

—

Commercial mortgage-backed agencies

15,521

344

—

15,865

—

Collateralized mortgage obligations

3,140

3

—

3,143

—

Obligations of states and political subdivisions

16,215

5,357

—

21,572

—

Total held to maturity

$

93,979

$

6,832

$

155

$

100,656

$

—


‎

Proceeds from sales of available for sale securities and the realized gains and losses were as follows:

Nine Months Ended

Three Months Ended

September 30,

September 30,

(in thousands)

2020

2019

2020

2019

Proceeds

$

30,831

$

12,046

$

29,751

$

6,669

Realized gains

622

74

575

1

Realized losses

—

73

—

—

The following table shows the Corporation’s investment securities with gross unrealized losses and fair values at September 30, 2020 and December 31, 2019, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:

Less than 12 months

12 months or more

(in thousands)

Fair
‎Value

Unrealized
‎Losses

Number of
‎Investments

Fair
‎Value

Unrealized
‎Losses

Number of
‎Investments

September 30, 2020

Available for Sale:

U.S. government agencies

$

16,420

$

30

4

$

—

$

—

—

Residential mortgage-backed agencies

8,512

93

3

—

—

Commercial mortgage-backed agencies

16,109

14

1

—

—

—

Collateralized debt obligations

—

—

—

12,760

5,765

9

Total available for sale

$

41,041

$

137

8

$

12,760

$

5,765

9

December 31, 2019

Available for Sale:

U.S. government agencies

$

24,907

$

80

3

$

14,987

$

13

3

Residential mortgage-backed agencies

4,900

17

1

—

—

—

Commercial mortgage-backed agencies

4,623

37

2

5,793

55

3

Collateralized mortgage obligations

—

—

—

35,472

109

1

Collateralized debt obligations

—

—

—

14,354

4,089

9

Total available for sale

$

34,430

$

134

6

$

70,606

$

4,266

16

Held to Maturity:

Residential mortgage-backed agencies

$

2,722

$

6

3

$

9,486

$

149

12

Total held to maturity

$

2,722

$

6

3

$

9,486

$

149

12

Management systematically evaluates securities for impairment on a quarterly basis. Based upon application of accounting guidance for subsequent measurement in ASC Topic 320 (ASC Section 320-10-35), management assesses whether (a) the Corporation has the intent to sell a security being evaluated and (b) it is more likely than not that the Corporation will be required to sell the security prior to the anticipated recovery of any decline in fair value. If neither applies, then any decline in the fair value below the security’s cost that is considered an other-than-temporary decline is split into two components. The first component is the loss attributable to declining credit quality. Credit losses are recognized in earnings as realized losses in the period in which the impairment determination is made. The second component consists of all other losses, which are recognized in other comprehensive loss. In estimating other than temporary impairment (“OTTI”) losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) adverse conditions specifically related to the security, an industry, or a geographic area, (3) the historic and implied volatility of the fair value of the security, (4) changes in the rating of the security by a rating agency, (5) recoveries or additional declines in fair value subsequent to the balance sheet date, (6) failure of the issuer of the security to make scheduled interest or principal payments, and (7) the payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future. Management also monitors cash flow projections for securities that are considered beneficial interests under the guidance of ASC Subtopic 325-40, Investments – Other – Beneficial Interests in Securitized Financial Assets, (ASC Section 325-40-35).

Management believes that the valuation of certain securities is a critical accounting policy that requires significant estimates in preparation of the Corporation’s consolidated financial statements. Management utilizes an independent third party to prepare both the impairment valuations and fair value determinations for the Corporation’s collateralized debt obligation (“CDO”) portfolio consisting of pooled trust preferred securities. See Note 8 for a discussion of the methodology used by management to determine the fair values of these securities. Based upon a review of credit quality and the cash flow tests performed by the independent third party, management determined that there were no securities that had credit-related non-cash OTTI charges during the first nine months of 2020 or 2019.

The Corporation does not believe that the investment securities that were in an unrealized loss position at September 30, 2020 represent other-than-temporary impairment. The Corporation does not intend to sell, nor is it anticipated that the Corporation would be required to sell, any of its impaired investment securities at a loss.

The following tables present a cumulative roll-forward of the amount of non-cash OTTI charges related to credit losses which have been recognized in earnings for the trust preferred securities in the CDO portfolio held and not intended to be sold for the nine and three month periods ended September 30, 2020 and 2019:

Nine Months Ended

September 30,

(in thousands)

2020

2019

Balance of credit-related OTTI at January 1

$

2,446

$

2,646

Reduction for increases in cash flows expected to be collected

(151)

(149)

Balance of credit-related OTTI at September 30

$

2,295

$

2,497

Three Months Ended

September 30,

(in thousands)

2020

2019

Balance of credit-related OTTI at July 1

$

2,345

$

2,547

Reduction for increases in cash flows expected to be collected

(50)

(50)

Balance of credit-related OTTI at September 30

$

2,295

$

2,497

The amortized cost and estimated fair value of securities by contractual maturity at September 30, 2020 are shown in the following table. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.

September 30, 2020

(in thousands)

Amortized
‎Cost

Fair
‎Value

Contractual Maturity

Available for Sale:

Due after one year through five years

$

4,434

$

4,555

Due after five years through ten years

24,821

25,745

Due after ten years

65,371

59,920

94,626

90,220

Residential mortgage-backed agencies

13,037

13,163

Commercial mortgage-backed agencies

33,566

34,160

Collateralized mortgage obligations

15,226

15,618

Total available for sale

$

156,455

$

153,161

Held to Maturity:

Due after ten years

$

20,759

$

26,038

Residential mortgage-backed agencies

34,868

36,025

Commercial mortgage-backed agencies

11,773

12,388

Collateralized mortgage obligations

1,821

1,919

Total held to maturity

$

69,221

$

76,370