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Investments
 9 Months Ended
Sep. 30, 2020
Schedule of Investments [Abstract]  
Investments

 

2. Investments

 

A summary of investment securities available-for-sale is as follows:

 

(Dollars in thousands)  As of September 30, 2020 
       Gross   Gross     
   Amortized   unrealized   unrealized   Estimated 
   cost   gains   losses   fair value 
                 
U. S. treasury securities  $2,000   $47   $-   $2,047 
U. S. federal agency obligations   18,860    146    (18)   18,988 
Municipal obligations, tax exempt   135,700    6,179    (2)   141,877 
Municipal obligations, taxable   45,414    2,965    -    48,379 
Agency mortgage-backed securities   80,421    3,144    -    83,565 
Certificates of deposit   4,674    -    -    4,674 
Total  $287,069   $12,481   $(20)  $299,530 

 

(Dollars in thousands)  As of December 31, 2019 
       Gross   Gross     
   Amortized   unrealized   unrealized   Estimated 
   cost   gains   losses   fair value 
                 
U. S. treasury securities  $2,300   $16   $-   $2,316 
U. S. federal agency obligations   4,015    91    -    4,106 
Municipal obligations, tax exempt   142,391    3,513    (42)   145,862 
Municipal obligations, taxable   45,541    1,293    (55)   46,779 
Agency mortgage-backed securities   159,908    2,353    (230)   162,031 
Certificates of deposit   1,904    -    -    1,904 
Total  $356,059   $7,266   $(327)  $362,998 

 

 

The tables above show that some of the securities in the available-for-sale investment portfolio had unrealized losses, or were temporarily impaired, as of September 30, 2020 and December 31, 2019. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date. Securities which were temporarily impaired are shown below, along with the length of time in a continuous unrealized loss position.

 

(Dollars in thousands)      As of September 30, 2020 
       Less than 12 months   12 months or longer   Total 
   No. of   Fair   Unrealized   Fair   Unrealized   Fair   Unrealized 
   securities   value   losses   value   losses   value   losses 
U.S. federal agency obligations   5   $13,848   $(18)  $-   $-   $13,848   $(18)
Municipal obligations, tax exempt   3    1,329    (2)   -    -    1,329    (2)
Total   8   $15,177   $(20)  $-   $-   $15,177   $(20)

 

(Dollars in thousands)      As of December 31, 2019 
       Less than 12 months   12 months or longer   Total 
   No. of   Fair   Unrealized   Fair   Unrealized   Fair   Unrealized 
    securities   value   losses   value   losses   value   losses 
Municipal obligations, tax exempt   23   $5,676   $(16)  $3,473   $(26)  $9,149   $(42)
Municipal obligations, taxable   4    2,563    (55)   -    -    2,563    (55)
Agency mortgage-backed securities   21    15,735    (43)   17,137    (187)   32,872    (230)
Total   48   $23,974   $(114)  $20,610   $(213)  $44,584   $(327)

 

The Company’s U.S. federal agency obligations portfolio consists of securities issued by the government-sponsored agencies of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Bank (“FHLB”). The receipt of principal and interest on U.S. federal agency obligations is guaranteed by the respective government-sponsored agency guarantor, such that the Company believes that its U.S. federal agency obligations do not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and its belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the U.S. federal agency obligations identified in the tables above were temporarily impaired as of September 30, 2020.

 

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. The Company did not intend to sell and it was more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of their costs. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the municipal obligations identified in the tables above were temporarily impaired as of September 30, 2020 and December 31, 2019.

 

The table below sets forth amortized cost and fair value of investment securities at September 30, 2020. The table includes scheduled principal payments and estimated prepayments, based on observable market inputs, for agency mortgage-backed securities. Actual maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties.

 

(Dollars in thousands)  Amortized   Estimated 
   cost   fair value 
Due in less than one year  $12,464   $12,489 
Due after one year but within five years   146,177    151,148 
Due after five years but within ten years   63,935    67,775 
Due after ten years   64,493    68,118 
Total  $287,069   $299,530 

 

 

Sales proceeds and gross realized gains and losses on sales of available-for-sale securities were as follows:

 

   2020   2019   2020   2019 
(Dollars in thousands)  Three months ended September 30,   Nine months ended September 30, 
   2020   2019   2020   2019 
                 
Sales proceeds  $16,655   $-   $61,164   $9,491 
                     
Realized gains  $678   $-   $2,450   $2 
Realized losses   -    -    (2)   (148)
Net realized losses  $678   $-   $2,448   $(146)

 

Securities with carrying values of $279.9 million and $240.0 million were pledged to secure public funds on deposit, repurchase agreements and as collateral for borrowings at September 30, 2020 and December 31, 2019, respectively. Except for U.S. federal agency obligations, no investment in a single issuer exceeded 10% of consolidated stockholders’ equity.