Investment Securities

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Investments Securities

Investment Securities

The following table shows the amortized cost, the estimated fair value and the allowance for credit losses of the held-to-maturity securities and available-for-sale securities at March 31, 2022 and December 31, 2021, by contractual maturity within each type:

	At March 31, 2022
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Securities Held-to-Maturity
U.S. government corporations and agencies:
Within 1 year	$	2,000	$	8	$	—	$	—	$	2,008
	2,000		8		—		—		2,008
Residential mortgage-backed securities:
After 1 year to 5 years	1,188		—		(16)		—		1,172
After 5 years to 10 years	5,858		7		(32)		—		5,833
Over 10 years	157,293		268		(8,650)		—		148,911
	164,339		275		(8,698)		—		155,916
Total	$	166,339	$	283	$	(8,698)	$	—	$	157,924
Securities Available-for-Sale
State and political subdivisions:
After 1 year to 5 years	$	2,326	$	1	$	(15)	$	—	$	2,312
	2,326		1		(15)		—		2,312
Residential mortgage-backed securities:
Within 1 year	21		—		—		—		21
After 1 year to 5 years	370		—		(4)		—		366
After 5 years to 10 years	3,533		—		(48)		—		3,485
Over 10 years	271,817		32		(19,033)		—		252,816
	275,741		32		(19,085)		—		256,688
Collateralized mortgage obligations:
After 5 years to 10 years	439		—		(7)		—		432
Over 10 years	2,631		—		(116)		—		2,515
	3,070		—		(123)		—		2,947
Corporate bonds:
Within 1 year	1,500		—		—		—		1,500
After 1 year to 5 years	29,726		64		(561)		(85)		29,144
After 5 years to 10 years	60,497		—		(1,904)		(1,190)		57,403
	91,723		64		(2,465)		(1,275)		88,047
Total	$	372,860	$	97	$	(21,688)	$	(1,275)	$	349,994

	At December 31, 2021
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Securities Held-to-Maturity
U.S. government corporations and agencies:
Within 1 year	$	6,999	$	34	$	—	$	—	$	7,033
	6,999		34		—		—		7,033
Residential mortgage-backed securities:
After 5 years to 10 years	5,208		194		—		—		5,402
Over 10 years	164,776		2,175		(984)		—		165,967
	169,984		2,369		(984)		—		171,369
Total	$	176,983	$	2,403	$	(984)	$	—	$	178,402
Securities Available-for-Sale
State and political subdivisions:
After 1 year to 5 years	$	2,326	$	7	$	—	$	—	$	2,333
	2,326		7		—		—		2,333
Residential mortgage-backed securities:
Within 1 year	31		—		—		—		31
After 1 year to 5 years	153		5		—		—		158
After 5 years to 10 years	2,286		82		—		—		2,368
Over 10 years	220,153		671		(2,276)		—		218,548
	222,623		758		(2,276)		—		221,105
Collateralized mortgage obligations:
After 5 years to 10 years	481		7		—		—		488
Over 10 years	2,813		—		(23)		—		2,790
	3,294		7		(23)		—		3,278
Corporate bonds:
Within 1 year	2,500		4		—		—		2,504
After 1 year to 5 years	28,731		755		(67)		(51)		29,368
After 5 years to 10 years	60,000		—		(703)		(878)		58,419
	91,231		759		(770)		(929)		90,291
Total	$	319,474	$	1,531	$	(3,069)	$	(929)	$	317,007

Expected maturities may differ from contractual maturities because debt issuers may have the right to call or prepay obligations without call or prepayment penalties and mortgage-backed securities typically prepay at a rate faster than contractually due.

Securities with a carrying value of $439.9 million and $281.7 million at March 31, 2022 and December 31, 2021, respectively, were pledged to secure public funds deposits and other contractual obligations. There were no pledged securities to secure credit derivatives and interest rate swaps at March 31, 2022. Securities of $23.0 million were pledged to secure credit derivatives and interest rate swaps at December 31, 2021. See Note 11, "Derivative Instruments and Hedging Activities" for additional information.

The following table presents information related to sales of securities available-for-sale during the three months ended March 31, 2022 and 2021:

	Three Months Ended March 31,
(Dollars in thousands)	2022		2021
Securities available-for-sale:
Proceeds from sales	$	1,530	$	1,563
Gross realized gains on sales	30		65
Tax expense related to net realized gains on sales	6		14

At March 31, 2022 and December 31, 2021, there were no reportable investments in any single issuer representing more than 10% of shareholders’ equity.

The following table shows the fair value of securities that were in an unrealized loss position for which an allowance for credit losses has not been recorded at March 31, 2022 and December 31, 2021, by the length of time those securities were in a continuous loss position.

	Less than Twelve Months				Twelve Months or Longer				Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At March 31, 2022
Securities Held-to-Maturity
Residential mortgage-backed securities	$	129,937	$	(8,276)	$	3,872	$	(422)	$	133,809	$	(8,698)
Total	$	129,937	$	(8,276)	$	3,872	$	(422)	$	133,809	$	(8,698)
Securities Available-for-Sale
State and political subdivisions	$	1,281	$	(15)	$	—	$	—	$	1,281	$	(15)
Residential mortgage-backed securities	205,772		(13,887)		48,596		(5,198)		254,368		(19,085)
Collateralized mortgage obligations	2,947		(123)		—		—		2,947		(123)
Corporate bonds	1,280		(1)		—		—		1,280		(1)
Total	$	211,280	$	(14,026)	$	48,596	$	(5,198)	$	259,876	$	(19,224)
At December 31, 2021
Securities Held-to-Maturity
Residential mortgage-backed securities	$	89,837	$	(984)	$	—	$	—	$	89,837	$	(984)
Total	$	89,837	$	(984)	$	—	$	—	$	89,837	$	(984)
Securities Available-for-Sale
Residential mortgage-backed securities	$	164,326	$	(1,816)	$	12,097	$	(460)	$	176,423	$	(2,276)
Collateralized mortgage obligations	2,790		(23)		—		—		2,790		(23)
Corporate bonds	779		(1)		—		—		779		(1)
Total	$	167,895	$	(1,840)	$	12,097	$	(460)	$	179,992	$	(2,300)

At March 31, 2022, the fair value of held-to-maturity securities in an unrealized loss position for which an allowance for credit losses has not been recorded was $133.8 million, including unrealized losses of $8.7 million. These holdings were comprised of fifty-nine federal agency mortgage-backed securities, which are U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The Corporation did not recognize any credit losses on held-to-maturity debt securities for the three months ended March 31, 2022. Accrued interest receivable on held-to-maturity debt securities totaled $351 thousand at March 31, 2022 and is included within Accrued interest receivable and other assets on the condensed consolidated balance sheet. This amount is excluded from the estimate of expected credit losses.

At March 31, 2022, the fair value of available-for-sale securities in an unrealized loss position for which an allowance for credit losses has not been recorded was $259.9 million, including unrealized losses of $19.2 million. These holdings were comprised of (1) eighty-seven federal agency mortgage-backed securities, which are U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses, (2) three investment grade corporate bonds, (3) two collateralized mortgage obligation bonds and (4) one state and political subdivisions bond. The Corporation does not intend to sell the securities in an unrealized loss position and is unlikely to be required to sell these securities before a recovery of fair value, which may be maturity. The Corporation concluded that the decline in fair value of these securities was not indicative of a credit loss. Accrued interest receivable on available-for-sale debt securities totaled $821 thousand at March 31, 2022 and is included within Accrued interest receivable and other assets on the condensed consolidated balance sheet. This amount is excluded from the estimate of expected credit losses.

The table below presents a rollforward by major security type for the three months ended March 31, 2022 of the allowance for credit losses on securities available-for-sale.

(Dollars in thousands)	Corporate Bonds
Three months ended March 31, 2022
Securities Available-for-Sale
Beginning balance	$	(929)
Additions for securities for which no previous expected credit losses were recognized	(45)
Change in securities for which a previous expected credit loss was recognized	(301)
Ending balance	$	(1,275)
Three months ended March 31, 2021
Securities Available-for-Sale
Beginning balance	$	(869)
Additions for securities for which no previous expected credit losses were recognized	(19)
Change in securities for which a previous expected credit loss was recognized	403
Ending balance	$	(485)

At March 31, 2022, the fair value of available-for-sale securities in an unrealized loss position for which an allowance for credit losses has been recorded was $74.1 million, including unrealized losses of $3.7 million, and allowance for credit losses of $1.3 million. These holdings were comprised of thirty-three investment grade corporate bonds which fluctuate in value based on changes in market conditions. For these securities, fluctuations were primarily due to changes in the interest rate environment. The Corporation does not have the intent to sell these securities and it is not likely that it will be required to sell the securities before their anticipated recovery. The underlying issuers continue to make timely principal and interest payments on the securities.

The Corporation recognized a $1 thousand and a $115 thousand net gain on equity securities during the three months ended March 31, 2022 and 2021, respectively, in other noninterest income. There were no sales of equity securities during the three months ended March 31, 2022 or 2021.