Investments

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

The following tables present the amortized cost, gross unrealized gains and losses, allowance of credit losses and fair value of securities available for sale and held to maturity:


	September 30, 2020
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Available-for-sale securities:
Obligations of U.S. Government-sponsored enterprises	$	9,972	$	228	$	—	$	—	$	10,200
Obligations of states and political subdivisions	355,036		11,625		(539)		—		366,122
Agency mortgage-backed securities	581,111		24,884		(46)		—		605,949
U.S. Treasury bills	10,977		544		—		—		11,521
Corporate debt securities	11,502		134		(2)		—		11,634
Total securities available for sale	$	968,598	$	37,415	$	(587)	$	—	$	1,005,426
Held-to-maturity securities:

Obligations of states and political subdivisions	$	95,497	$	1,038	$	—	$	(16)	$	96,519
Agency mortgage-backed securities	109,954		2,468		(148)		—		112,274
Corporate debt securities	122,243		8,367		—		(629)		129,981
Total securities held-to-maturity	$	327,694	$	11,873	$	(148)	$	(645)	$	338,774
Less: Allowance for credit losses	645
Total securities held-to-maturity, net	$	327,049


	December 31, 2019
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale securities:
Obligations of U.S. Government-sponsored enterprises	$	9,954	$	92	$	—	$	10,046
Obligations of states and political subdivisions	207,269		6,118		(363)		213,024
Agency mortgage-backed securities	888,129		15,083		(1,191)		902,021
U.S. Treasury Bills	9,971		255		—		10,226
Total securities available for sale	$	1,115,323	$	21,548	$	(1,554)	$	1,135,317
Held-to-maturity securities:

Obligations of states and political subdivisions	$	11,704	$	170	$	—	$	11,874
Agency mortgage-backed securities	46,346		675		—		47,021
Corporate debt securities	123,116		128		(200)		123,044
Total securities held to maturity	$	181,166	$	973	$	(200)	$	181,939

During the second quarter of 2020, the Company transferred municipal securities and agency mortgage-backed securities with an aggregate book value of $163.6 million and an aggregate fair value of $175.1 million from available-for-sale to held-to-maturity. The Company believes the held- to-maturity category is more consistent with the Company’s intent for these securities. The transfer of securities was made at fair value at the time of transfer. The unamortized portion of the $11.5 million unrealized holding gain at the time of transfer is retained in accumulated other comprehensive income and in the carrying value of held-to-maturity securities. Such amounts are amortized over the remaining life of the securities.

During the third quarter of 2020, the Company sold seven agency mortgage-backed securities with an aggregate book value of $19.6 million for an aggregate gain of $0.4 million.

At September 30, 2020 and December 31, 2019, there were no holdings of securities of any one issuer in an amount greater than 10% of shareholders’ equity, other than U.S. Government agencies and sponsored enterprises. The agency mortgage-backed securities are all issued by U.S. Government agencies and sponsored enterprises. Securities having a fair value of $449.5 million and $484.8 million at September 30, 2020 and December 31, 2019, respectively, were pledged as collateral to secure deposits of public institutions and for other purposes as required by law or contract provisions.

The amortized cost and estimated fair value of debt securities at September 30, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The weighted average life of the mortgage-backed securities is approximately 3 years.


	Available for sale						Held to maturity
(in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	3,139	$	3,161	$	—	$	—
Due after one year through five years	32,281		33,232		10,187		10,587
Due after five years through ten years	16,828		17,443		125,476		133,063
Due after ten years	335,239		345,641		82,077		82,850
Agency mortgage-backed securities	581,111		605,949		109,954		112,274

	$	968,598	$	1,005,426	$	327,694	$	338,774

The following table presents a summary of available-for-sale investment securities in an unrealized loss position:


	September 30, 2020
			Less than 12 months							12 months or more					Total
(in thousands)	Fair Value			Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses

Obligations of states and political subdivisions	$	57,934		$	539	$	—	$	—		$	57,934	$	539
Agency mortgage-backed securities	21,211			46		—		—			21,211		46

Corporate debt securities	3,000			2		—		—			3,000		2
	$	82,145		$	587	$	—	$	—		$	82,145	$	587


The following table presents a summary of available-for-sale and held-to-maturity investment securities in an unrealized loss position:

	December 31, 2019
			Less than 12 months							12 months or more					Total
(in thousands)	Fair Value			Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses

Obligations of states and political subdivisions	$	56,327		$	363	$	—	$	—		$	56,327	$	363
Agency mortgage-backed securities	131,693			756		41,491		435			173,184		1,191

Corporate debt securities	67,964			200		—		—			67,964		200
	$	255,984		$	1,319	$	41,491	$	435		$	297,475	$	1,754

The unrealized losses at both September 30, 2020 and December 31, 2019 were primarily attributable to changes in market interest rates after the securities were purchased. Management systematically evaluates investment securities for other-than-temporary declines in fair value on a quarterly basis. This analysis requires management to consider various factors, which include among other considerations (1) the present value of the cash flows expected to be collected compared to the amortized cost of the security, (2) duration and magnitude of the decline in value, (3) the financial condition of the issuer or issuers, (4) structure of the security, and (5) the intent to sell the security or whether it is more likely than not the Company would be required to sell the security before its anticipated recovery in market value. At September 30, 2020, management performed its quarterly analysis of all securities with an unrealized loss and concluded no individual securities were other-than-temporarily impaired. Accrued interest receivable on available-for-sale debt securities totaled $4.0 million at September 30, 2020 and is excluded from the estimate of credit losses.

Accrued interest receivable on held-to-maturity debt securities totaled $2.4 million at September 30, 2020 and is excluded from the estimate of expected credit losses. The estimate of expected credit losses considers historical credit loss information adjusted for current conditions and reasonable and supportable forecasts. At September 30, 2020, the ACL on held-to-maturity securities was $0.6 million.