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Investment Securities
 6 Months Ended
Jun. 30, 2020
Investments, Debt and Equity Securities [Abstract]  
Investment Securities

Note 3—Investment Securities

 

The amortized cost and estimated fair values of investment securities are summarized below:

 

AVAILABLE-FOR-SALE:      Gross   Gross     
   Amortized   Unrealized   Unrealized     
(Dollars in thousands)  Cost   Gains   Losses   Fair Value 
June 30, 2020                    
US Treasury securities  $3,502   $19   $—   $3,521 
Government Sponsored Enterprises   990    23    —    1,013 
Mortgage-backed securities   172,969    7,683    317    180,335 
Small Business Administration pools   39,289    938    11    40,216 
State and local government   64,043    4,794    —    68,837 
Other securities   1,997    —    —    1,997 
   $282,790   $13,457   $328   $295,919 
                     
       Gross   Gross     
   Amortized   Unrealized   Unrealized     
(Dollars in thousands)  Cost   Gains   Losses   Fair Value 
December 31, 2019                    
US Treasury securities  $7,190   $16   $3   $7,203 
Government Sponsored Enterprises   984    17    —    1,001 
Mortgage-backed securities   182,736    1,490    640    183,586 
Small Business Administration pools   45,301    259    217    45,343 
State and local government   47,418    2,371    141    49,648 
Other securities   19    —    —    19 
   $283,648   $4,153   $1,001   $286,800 

 

During the first quarter of 2019, the Company reclassified the portfolio of securities listed as held-to-maturity to available-for-sale. There were no investment securities listed as held-to-maturity as of June 30, 2020.

 

During the six months ended June 30, 2020 and 2019, the Company received proceeds of $0 and $51.1 million, respectively, from the sale of investment securities available-for-sale. For the three months ended June 30, 2020, there were no gross realized gains from the sale of investment securities available-for-sale and no gross realized losses. For the three months ended June 30, 2019, gross realized gains from the sale of investment securities available-for-sale amounted to $315.0 thousand and gross realized losses amounted to $149.7 thousand.  For the six months ended June 30, 2020, there were no gross realized gains from the sale of investment securities available-for-sale and no gross realized losses. For the six months ended June 30, 2019, gross realized gains from the sale of investment securities available-for-sale amounted to $354.6 thousand and gross realized losses amounted to $219.6 thousand.

 

At June 30, 2020, other securities available-for-sale included the following at fair value: a mutual fund at $6.7 thousand, and foreign debt of $10.0 thousand. As required by Accounting Standards Update (“ASU”) 2016-01-Financial Instruments-Overall (Subtopic 825-10), the Company measured its equity investments at fair value with changes in the fair value recognized through net income. For the six months ended June 30, 2020 and 2019, a $2.1 thousand loss and a $2.0 thousand gain were recognized on a mutual fund, respectively. At December 31, 2019, corporate and other securities available-for-sale included the following at fair value: a mutual fund at $8.8 thousand and foreign debt of $10.0 thousand. Other investments, at cost, include Federal Home Loan Bank (“FHLB”) stock in the amount of $1.1 million and corporate stock in the amount of $1.0 million at June 30, 2020. The Company held $991.4 thousand of FHLB stock and $1.0 million in corporate stock at December 31, 2019.

Note 3—Investment Securities-continued

 

The following tables show gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous loss position, at June 30, 2020 and December 31, 2019.

  

                              
(Dollars in thousands)  Less than 12 months   12 months or more   Total 
June 30, 2020  Fair   Unrealized   Fair   Unrealized   Fair   Unrealized 
Available-for-sale securities:  Value   Loss   Value   Loss   Value   Loss 
                         
Mortgage-backed securities  $23,967   $264   $3,639   $53   $27,606   $317 
Small Business Administration pools   194    —    5,693    11    5,887    11 
Total  $24,161   $264   $9,332   $64   $33,493   $328 
                              
(Dollars in thousands)  Less than 12 months   12 months or more   Total 
December 31, 2019  Fair   Unrealized   Fair   Unrealized   Fair   Unrealized 
Available-for-sale securities:  Value   Loss   Value   Loss   Value   Loss 
                         
US Treasury securities  $—   $—   $1,508   $3   $1,508   $3 
Mortgage-backed securities   57,175    485    12,419    155    69,594    640 
Small Business Administration pools   7,891    53    13,502    164    21,393    217 
State and local government   5,695    141    —    —    5,695    141 
Total  $70,761   $679   $27,429   $322   $98,190   $1,001 

 

Government Sponsored Enterprise, Mortgage-Backed Securities: The Company owned mortgage-backed securities (“MBSs”), including collateralized mortgage obligations (“CMOs”), issued by government sponsored enterprises (“GSEs”) with an amortized cost of $172.9 million and $182.7 million and approximate fair value of $180.3 million and $183.6 million at June 30, 2020 and December 31, 2019, respectively. As of June 30, 2020, and December 31, 2019, all of the MBSs issued by GSEs were classified as “Available-for-Sale.” Unrealized losses on certain of these investments are not considered to be “other than temporary,” and we have the intent and ability to hold these until they mature or recover the current book value. The contractual cash flows of the investments are guaranteed by the GSEs. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment. Because the Company does not intend to sell these securities and it is more likely than not that the Company will not be required sell these securities before a recovery of its amortized cost, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at June 30, 2020. 

 

Non-agency Mortgage Backed Securities: The Company held private label mortgage-backed securities (“PLMBSs”), including CMOs, at June 30, 2020 with an amortized cost of $66.4 thousand and approximate fair value of $63.3 thousand. The Company held PLMBSs, including CMOs, at December 31, 2019 with an amortized cost of $73.5 thousand and approximate fair value of $73.5 thousand. Management monitors each of these securities on a quarterly basis to identify any deterioration in the credit quality, collateral values and credit support underlying the investments.

State and Local Governments and Other: Management monitors these securities on a quarterly basis to identify any deterioration in the credit quality. Included in the monitoring is a review of the credit rating, a financial analysis and certain demographic data on the underlying issuer. The Company does not consider these securities to be other-than-temporarily impaired at June 30, 2020.

Note 3—Investment Securities-continued

 

The following sets forth the amortized cost and fair value of investment securities at June 30, 2020 by contractual maturity. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay the obligations with or without prepayment penalties. MBSs are based on average life at estimated prepayment speeds.

 

June 30, 2020  Available-for-sale 
   Amortized   Fair 
(Dollars in thousands)  Cost   Value 
Due in one year or less  $12,438   $12,566 
Due after one year through five years   120,737    124,897 
Due after five years through ten years   119,104    126,668 
Due after ten years   30,511    31,788 
Total  $282,790   $295,919