Investment Securities (Tables)

9 Months Ended

Sep. 30, 2019

Amortized Cost and Fair Values of Securities

The amortized costs and approximate fair values, together with gross unrealized gains and losses on securities, are in the tables below. All mortgage-backed securities and collateralized mortgage obligations held as of September 30, 2019 and December 31, 2018 were guaranteed by government sponsored entities, government corporations or federal agencies.


	September 30, 2019
			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
Available for Sale Securities
Mortgage-backed securities	$	113,701	$	1,970	$	(215)	$	115,456
Collateralized mortgage obligations		99,769		720		(217)		100,272
Municipal obligations		154,948		9,951		-		164,899
Corporate obligations		2,991		-		(642)		2,349
Total investment securities	$	371,409	$	12,641	$	(1,074)	$	382,976


	December 31, 2018
			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
Available for Sale Securities
Mortgage-backed securities	$	106,094	$	296	$	(2,047)	$	104,343
Collateralized mortgage obligations		110,994		157		(1,870)		109,281
Municipal obligations		153,976		2,008		(1,088)		154,896
Corporate obligations		2,998		-		(643)		2,355
Total investment securities	$	374,062	$	2,461	$	(5,648)	$	370,875

Amortized Cost and Fair Value of Available for Sale Securities by Contractual Maturity


	Available for Sale
Description of Securities	Amortized Cost		Fair Value
Security obligations due
Within one year	$	-	$	-
One to five years		285		290
Five to ten years		16,518		17,260
After ten years		141,136		149,698
		157,939		167,248
Mortgage-backed securities		113,701		115,456
Collateralized mortgage obligations		99,769		100,272
Totals	$	371,409	$	382,976

Investments Gross Unrealized Losses and Fair Value in Continuous Unrealized Loss Position

The following tables show the gross unrealized losses and fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2019 and December 31, 2018:


	September 30, 2019
	Less than 12 Months				12 Months or More				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Available for Sale Securities
Mortgage-backed securities	$	10,137	$	(17)	$	20,085	$	(198)	$	30,222	$	(215)
Collateralized mortgage obligations		21,156		(65)		18,737		(152)		39,893		(217)
Corporate obligations		-		-		2,349		(642)		2,349		(642)
Total temporarily impaired securities	$	31,293	$	(82)	$	41,171	$	(992)	$	72,464	$	(1,074)


	December 31, 2018
	Less than 12 Months				12 Months or More				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Available for Sale Securities
Mortgage-backed securities	$	33,176	$	(348)	$	42,230	$	(1,699)	$	75,406	$	(2,047)
Collateralized mortgage obligations		15,139		(111)		64,495		(1,759)		79,634		(1,870)
Municipal obligations		35,501		(542)		14,018		(546)		49,519		(1,088)
Corporate obligations		-		-		2,355		(643)		2,355		(643)
Total temporarily impaired securities	$	83,816	$	(1,001)	$	123,098	$	(4,647)	$	206,914	$	(5,648)

Pooled Trust Preferred Collateralized Debt Obligations

Pooled Trust Preferred Securities. The Bank has invested in a pooled trust preferred security. At September 30, 2019, the current book value of our pooled trust preferred security was $3.0 million. The original par value of this security was $3.0 million. The pooled trust preferred security owned was performing as agreed in the first nine months of 2019. As of September 2019, current Moody’s rating for this bond was B3. The pooled trust preferred security owned by the Bank is exempt from the Volcker Rule.

The following table provides additional information related to the Bank’s investment in a pooled trust preferred security as of September 30, 2019:

Total

Excess

Number

subordination

Number of

of Banks

Actual

Total

(after taking

Banks /

and

Deferrals/

Projected

into account

Insurance

Defaults

best estimate

Realized

Cos.

Cos. In

(as a % of

of future

Original

Book

Fair

Unrealized

Losses

Lowest

Currently

Issuance

original

performing

deferrals/

Deal Name

Class

Par

Value

Loss

2019

Ratings

Performing

(Unique)

collateral)

collateral) (1)

defaults) (2)

(Dollars in Thousands)

U.S. Capital Funding I

3,000

2,991

2,349

(642)

Caa1

7.95

5.78

6.69

(1) A 10% recovery is applied to all projected defaults by depository institutions. A 15% recovery is applied to all projected defaults by insurance companies.

No recovery is applied to current defaults.

(2) Excess subordination represents the additional defaults in excess of both current and projected defaults that the collateralized debt obligation can absorb

before the bond experiences any credit impairment. Excess subordinated percentage is calculated by (a) determining what percentage of defaults a pool

can experience before the bond has credit impairment, and (b) subtracting from this default breakage percentage both total current and expected future

default percentages.