Investments

3 Months Ended

Mar. 31, 2021

Note 4. Investments

Available for Sale (AFS) Securities

The amortized cost and estimated fair value of AFS securities as of March 31, 2021 and December 31, 2020 are as follows:



(Dollars in thousands)			Gross		Gross
	Amortized		unrealized		unrealized		Fair
March 31, 2021	cost		gains		losses		value
U.S. Government and Agency securities	$	21,070	$	16	$	(170)	$	20,916
Municipal securities		235,808		5,582		(4,132)		237,258
Corporate securities		22,268		153		(264)		22,157
Agency mortgage-backed securities		85,429		1,360		(815)		85,974
Private-label mortgage-backed securities		11,966		45		(62)		11,949
Asset-backed securities		43,643		390		(109)		43,924
	$	420,184	$	7,546	$	(5,552)	$	422,178



(Dollars in thousands)			Gross		Gross
	Amortized		unrealized		unrealized		Fair
December 31, 2020	cost		gains		losses		value
U.S. Government and Agency securities	$	12,594	$	20	$	(40)	$	12,574
Municipal securities		236,253		11,020		(219)		247,054
Corporate securities		20,421		22		(155)		20,288
Agency mortgage-backed securities		70,443		1,905		(107)		72,241
Private-label mortgage-backed securities		8,412		56		(15)		8,453
Asset-backed securities		36,246		249		(165)		36,330
	$	384,369	$	13,272	$	(701)	$	396,940

At March 31, 2021 and December 31, 2020, the fair value of debt securities pledged to secure public funds and trust deposits totaled $129.1 million and $137.4 million, respectively. The Bank has no investment in a single issuer that exceeds 10% of shareholders’ equity.

The amortized cost and estimated fair value of debt securities at March 31, 2021, by contractual maturity are shown below. Actual maturities may differ from contractual maturities because of prepayment or call options embedded in the securities. Securities not due at a single maturity date are presented separately.

(Dollars in thousands)	Amortized ‎cost		Fair ‎value
Due in one year or less	$	2,361	$	2,367
Due after one year through five years		21,738		22,274
Due after five years through ten years		174,745		178,862
Due after ten years		80,302		76,828
		279,146		280,331
Mortgage-backed and asset-backed securities		141,038		141,847
	$	420,184	$	422,178

The composition of the net realized gains (losses) on debt securities for the three months ended are as follows:


	For the Three Months Ended
	March 31,
(Dollars in thousands)	2021		2020
Proceeds	$	—	$	165
Gross gains realized		—		—
Gross losses realized		—		(10)
Net (losses) gains realized	$	—	$	(10)

Tax benefit (provision) on net (losses) gains realized	$	—	$	2

Impairment:

The debt securities portfolio contained 205 securities with $178.6 million of temporarily impaired fair value and $5.6 million in unrealized losses at March 31, 2021. The total unrealized loss position has increased $4.9 million since year-end 2020.

For securities with an unrealized loss, Management applies a systematic methodology in order to perform an assessment of the potential for other-than-temporary impairment. In the case of debt securities, investments considered for other-than-temporary impairment: (1) had a specified maturity or repricing date; (2) were generally expected to be redeemed at par; and (3) were expected to achieve a recovery in market value within a reasonable period of time. In addition, the Bank considers whether it intends to sell these securities or whether it will be forced to sell these securities before the earlier of amortized cost recovery or maturity. The impairment identified on debt securities and subject to assessment at March 31, 2021, was deemed to be temporary and required no further adjustments to the financial statements, unless otherwise noted.

‎

The following table reflects temporary impairment in the AFS portfolio, aggregated by investment category, length of time that individual securities have been in a continuous unrealized loss position and the number of securities in each category as of March 31, 2021 and December 31, 2020:



	March 31, 2021
	Less than 12 months					12 months or more					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Losses		Count	Value		Losses		Count	Value		Losses		Count

U.S. Government and Agency ‎ securities	$	9,832	$	(134)	7	$	7,629	$	(36)	15	$	17,461	$	(170)	22
Municipal securities		97,958		(4,132)	107		—		—	—		97,958		(4,132)	107
Corporate securities		9,677		(173)	19		2,806		(91)	3		12,483		(264)	22
Agency mortgage-backed securities		31,182		(809)	32		1,504		(6)	3		32,686		(815)	35
Private-label mortgage-backed securities		6,828		(62)	5		—		—	—		6,828		(62)	5
Asset-backed securities		3,236		(29)	3		7,983		(80)	11		11,219		(109)	14
Total temporarily impaired ‎ securities	$	158,713	$	(5,339)	173	$	19,922	$	(213)	32	$	178,635	$	(5,552)	205



	December 31, 2020
	Less than 12 months					12 months or more					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Losses		Count	Value		Losses		Count	Value		Losses		Count

U.S. Government and Agency ‎ securities	$	3,966	$	(21)	5	$	4,185	$	(19)	11	$	8,151	$	(40)	16
Municipal securities		27,022		(219)	28		—		—	—		27,022		(219)	28
Corporate securities		7,576		(37)	13		3,040		(118)	4		10,616		(155)	17
Agency mortgage-backed securities		18,390		(101)	17		3,355		(6)	5		21,745		(107)	22
Private-label mortgage-backed securities		2,506		(15)	2		—		—	—		2,506		(15)	2
Asset-backed securities		1,458		(12)	2		11,452		(153)	15		12,910		(165)	17
Total temporarily impaired ‎ securities	$	60,918	$	(405)	67	$	22,032	$	(296)	35	$	82,950	$	(701)	102

The following table represents the cumulative credit losses on debt securities recognized in earnings for:



	Three Months Ended
(Dollars in thousands)	March 31,
	2021		2020
Balance of cumulative credit-related OTTI at January 1	$	272	$	272
Decreases for previously recognized credit losses on securities that paid off		(15)		—
Balance of credit-related OTTI at March 31	$	257	$	272

Equity Securities at Fair Value

The Corporation owns one equity investment with a readily determinable fair value. At March 31, 2021 and December 31, 2020, this investment was reported at fair value of $444 thousand and $391 thousand, respectively, with changes in value reported through income.