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Investment Securities

9 Months Ended

Sep. 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
September 30, 2020
US Treasury securities		$	1,503			$	7			$	—			$	1,510
Government Sponsored Enterprises			993				17				—				1,010
Mortgage-backed securities			171,441				7,763				154				179,050
Small Business Administration pools			36,369				922				19				37,272
State and local government			66,101				5,254				—				71,355
Corporate and Other securities			3,273				10				8				3,275
		$	279,680			$	13,973			$	181			$	293,472

						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 September 30, 2020.

During the nine months ended September 30, 2020 and 2019, the Company received proceeds of $2.2 million and $44.4 million, respectively, from the sale of investment securities available-for-sale. For the nine months ended September 30, 2020, gross realized gains from the sale of investment securities available-for-sale amounted to $99.2 thousand and there were no gross realized losses. For the nine months ended September 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. For the three months ended September 30, 2020, gross realized gains from the sale of investment securities available-for-sale amounted to $99.2 thousand and there were no gross realized losses. For the three months ended September 30, 2019, there were no realized gains or losses from the sale of investment securities available-for-sale.

At September 30, 2020, other securities available-for-sale included the following at fair value: a mutual fund at $6.5 thousand, foreign debt of $10.0 thousand and corporate fixed-to-floating rate subordinated debt of $3.3 million. 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 nine months ended September 30, 2020 and 2019, a $2.1 thousand loss and a $2.0 thousand gain were recognized on a mutual fund, respectively. For the three months ended September 30, 2020 and September 30, 2019 there were no gains or losses recognized on equity investments. At December 31, 2019, corporate and other securities available-for-sale included the following at fair value: a mutual fund at $8.9 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 September 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 September 30, 2020 and December 31, 2019.


(Dollars in thousands)		Less than 12 months								12 months or more								Total
September 30, 2020		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
Available-for-sale securities:		Value				Loss				Value				Loss				Value				Loss

Mortgage-backed securities		$	22,050			$	103			$	5,601			$	51			$	27,651			$	154
Small Business Administration pools			1,213				2				3,434				17				4,647				19
State and local government			1,009				—				—				—				1,009				—
Corporate and Other Securities			1,275				8				—				—				1,275				8
Total		$	25,547			$	113			$	9,035			$	68			$	34,582			$	181

(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 $171.4 million and $182.7 million and approximate fair value of $179.1 million and $183.6 million at September 30, 2020 and December 31, 2019, respectively. As of September 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 to sell these securities before a recovery of amortized cost, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at September 30, 2020.

Non-agency Mortgage Backed Securities: The Company held private label mortgage-backed securities (“PLMBSs”), including CMOs, at September 30, 2020 with an amortized cost of $61.5 thousand and approximate fair value of $58.6 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: 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 September 30, 2020.

Note 3—Investment Securities-continued

The following sets forth the amortized cost and fair value of investment securities at September 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.

September 30, 2020		Available-for-sale
		Amortized				Fair
(Dollars in thousands)		Cost				Value
Due in one year or less		$	10,573			$	10,661
Due after one year through five years			131,512				136,138
Due after five years through ten years			116,467				124,866
Due after ten years			21,128				21,807
Total		$	279,680			$	293,472