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Securities
 12 Months Ended
Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Securities Securities
The following tables present the amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of securities by major security type and class of security:
(Dollars in thousands)
 
 
 
 
 
 
 
December 31, 2019
Amortized Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
Available for Sale Debt Securities:
 
 
 
 
 
 
 
Obligations of U.S. government-sponsored enterprises

$157,255

 

$626

 

($233
)
 

$157,648

Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises
713,553

 
8,491

 
(2,964
)
 
719,080

Individual name issuer trust preferred debt securities
13,324

 
—

 
(745
)
 
12,579

Corporate bonds
11,141

 
—

 
(958
)
 
10,183

Total available for sale debt securities

$895,273

 

$9,117

 

($4,900
)
 

$899,490

Total securities

$895,273

 

$9,117

 

($4,900
)
 

$899,490


(Dollars in thousands)
 
 
 
 
 
 
 
December 31, 2018
Amortized Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
Available for Sale Debt Securities:
 
 
 
 
 
 
 
Obligations of U.S. government-sponsored enterprises

$246,708

 

$442

 

($4,467
)
 

$242,683

Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises
675,368

 
1,943

 
(16,518
)
 
660,793

Obligations of states and political subdivisions
935

 
2

 
—

 
937

Individual name issuer trust preferred debt securities
13,307

 
—

 
(1,535
)
 
11,772

Corporate bonds
13,402

 
—

 
(1,777
)
 
11,625

Total available for sale debt securities

$949,720

 

$2,387

 

($24,297
)
 

$927,810

Held to Maturity Debt Securities:
 
 
 
 
 
 
 
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises

$10,415

 

$—

 

($99
)
 

$10,316

Total held to maturity debt securities
10,415

 
—

 
(99
)
 
10,316

Total securities

$960,135

 

$2,387

 

($24,396
)
 

$938,126



As discussed in Note 2, on January 1, 2019, the Corporation adopted ASU 2017-12. As permitted by ASU 2017-12, qualifying debt securities classified as held to maturity with an amortized cost of $10.4 million and a fair value of $10.3 million were reclassified to available for sale upon the adoption date. An unrealized loss of $75 thousand (net of taxes) was recognized in the accumulated other comprehensive income component of shareholders’ equity at the date of adoption.

At December 31, 2019 and 2018, securities with a fair value of $431.9 million and $439.7 million, respectively, were pledged as collateral for FHLB borrowings, potential borrowings with the FRB, certain public deposits and for other purposes.  See Note 11 for additional discussion of FHLB borrowings.

The schedule of maturities of available for sale debt securities is presented below. Mortgage-backed securities are included based on weighted average maturities, adjusted for anticipated prepayments.  All other debt securities are included based on contractual maturities.  Actual maturities may differ from amounts presented because certain issuers have the right to call or prepay obligations with or without call or prepayment penalties.
(Dollars in thousands)
 
December 31, 2019
Amortized Cost
 
Fair Value
Due in one year or less

$103,241

 

$103,962

Due after one year to five years
349,290

 
351,538

Due after five years to ten years
264,354

 
264,958

Due after ten years
178,388

 
179,032

Total securities

$895,273

 

$899,490



Included in the above table are available for sale debt securities with an amortized cost balance of $180.4 million and a fair value of $179.1 million at December 31, 2019 that are callable at the discretion of the issuers.  Final maturities of the callable securities range from 4 months to 17 years, with call features ranging from 1 month to 2 years.

Other-Than-Temporary Impairment Assessment
Management assesses whether the decline in fair value of investment securities is other-than-temporary on a regular basis. Unrealized losses on debt securities may occur from current market conditions, increases in interest rates since the time of purchase, a structural change in an investment, volatility of earnings of a specific issuer, or deterioration in credit quality of the issuer.  Management evaluates impairments in value both qualitatively and quantitatively to assess whether they are other-than-temporary.

The following tables summarize temporarily impaired securities, segregated by length of time the securities have been in a continuous unrealized loss position:
(Dollars in thousands)
Less than 12 Months
 
12 Months or Longer
 
Total
December 31, 2019
#

Fair
Value
Unrealized
Losses
 
#

Fair
Value
Unrealized
Losses
 
#

Fair
Value
Unrealized
Losses
Obligations of U.S. government-sponsored enterprises
3


$20,364


($136
)
 
3


$49,902


($97
)
 
6


$70,266


($233
)
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises
4

41,150

(56
)
 
23

216,804

(2,908
)
 
27

257,954

(2,964
)
Individual name issuer trust preferred debt securities
—

—

—

 
5

12,579

(745
)
 
5

12,579

(745
)
Corporate bonds
—

—

—

 
3

10,183

(958
)
 
3

10,183

(958
)
Total temporarily impaired securities
7


$61,514


($192
)
 
34


$289,468


($4,708
)
 
41


$350,982


($4,900
)

(Dollars in thousands)
Less than 12 Months
 
12 Months or Longer
 
Total
December 31, 2018
#

Fair
Value
Unrealized
Losses
 
#

Fair
Value
Unrealized
Losses
 
#

Fair
Value
Unrealized
Losses
Obligations of U.S. government-sponsored enterprises
—


$—


$—

 
16


$157,032


($4,467
)
 
16


$157,032


($4,467
)
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises
10

47,060

(439
)
 
51

438,701

(16,178
)
 
61

485,761

(16,617
)
Individual name issuer trust preferred debt securities
—

—

—

 
5

11,772

(1,535
)
 
5

11,772

(1,535
)
Corporate bonds
3

1,198

(9
)
 
5

10,427

(1,768
)
 
8

11,625

(1,777
)
Total temporarily impaired securities
13


$48,258


($448
)
 
77


$617,932


($23,948
)
 
90


$666,190


($24,396
)


Further deterioration in credit quality of the underlying issuers of the securities, deterioration in the condition of the financial services industry, worsening of the current economic environment, or additional declines in real estate values, among other things, may further affect the fair value of these securities and increase the potential that certain unrealized losses be designated as other-than-temporary in future periods, and the Corporation may incur write-downs.

Obligations of U.S. Government Agency and U.S. Government-Sponsored Enterprise Securities, including Mortgage-Backed Securities
The gross unrealized losses on U.S. government agency and U.S. government-sponsored debt securities, including mortgage-backed securities, were primarily attributable to relative changes in interest rates since the time of purchase. The contractual cash flows for these securities are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities. Furthermore, the Corporation does not intend to sell these securities and it is not more-likely-than-not that the Corporation will be required to sell these securities before recovery of their cost basis, which may be maturity. Therefore, management does not consider these investments to be other-than-temporarily impaired at December 31, 2019.

Individual Name Issuer Trust Preferred Debt Securities
Included in debt securities in an unrealized loss position at December 31, 2019 were five trust preferred securities issued by four individual companies in the banking sector. Management believes the unrealized losses on these holdings are primarily attributable to changes in the investment spreads and interest rates and not changes in the credit quality of the issuers of the debt securities. Based on the information available through the filing date of this report, all individual name issuer trust preferred debt securities held in our portfolio continue to accrue interest and make payments as expected with no payment deferrals or defaults on the part of the issuers.  As of December 31, 2019, individual name issuer trust preferred
debt securities with an amortized cost of $2.0 million and unrealized losses of $161 thousand were rated below investment grade by Standard & Poors, Inc.  Management reviewed the collectability of these securities taking into consideration such factors as the financial condition of the issuers, reported regulatory capital ratios of the issuers, credit ratings, including ratings in effect as of the reporting period date as well as credit rating changes between the reporting period date and the filing date of this report, and other information.  We noted no additional downgrades to below investment grade between December 31, 2019 and the filing date of this report.  Based on this review, management concluded that it expects to recover the entire amortized cost basis of these securities.  Furthermore, the Corporation does not intend to sell these securities and it is not more-likely-than-not that the Corporation will be required to sell these securities before recovery of their cost basis, which may be maturity.  Therefore, management does not consider these investments to be other-than-temporarily impaired at December 31, 2019.

Corporate Bonds
At December 31, 2019, the Corporation had three corporate bond holdings with unrealized losses totaling $958 thousand. These investment grade corporate bonds were issued by large corporations in the financial services industry. Management believes the unrealized losses on these bonds are a function of the changes in the investment spreads and interest rate movements and not changes in the credit quality of the issuers of the debt securities. Management expects to recover the entire amortized cost basis of these securities. Furthermore, the Corporation does not intend to sell these securities and it is not more-likely-than-not that the Corporation will be required to sell these securities before recovery of their cost basis, which may be maturity.  Therefore, management does not consider these investments to be other-than-temporarily impaired at December 31, 2019.

The following table summarizes amounts relating to sales of securities:
(Dollars in thousands)
 
 
 
 
 
For the periods ended December 31,
2019

 
2018

 
2017

Proceeds from sales

$11,877

 

$—

 

$—

 
 
 
 
 
 
Gross realized gains

$—

 

$—

 

$—

Gross realized losses
(53
)
 
—

 
—

Net realized losses on securities

($53
)
 

$—

 

$—