SECURITIES AVAILABLE FOR SALE

9 Months Ended

Sep. 30, 2021

SECURITIES AVAILABLE FOR SALE

SECURITIES AVAILABLE FOR SALE

NOTE 2.           SECURITIES AVAILABLE FOR SALE

The following is a summary of securities available for sale:

			Gross		Gross
			Unrealized		Unrealized
(in thousands)	Amortized Cost		Gains		Losses		Fair Value
September 30, 2021
Mortgage-backed securities:
US Government-sponsored enterprises	$	181,821	$	3,386	$	(1,939)	$	183,268
US Government agency		53,475		1,470		(239)		54,706
Private label		62,843		185		(114)		62,914
Obligations of states and political subdivisions thereof		158,914		2,090		(827)		160,177
Corporate bonds		82,533		2,376		(647)		84,262
Total securities available for sale	$	539,586	$	9,507	$	(3,766)	$	545,327

			Gross		Gross
			Unrealized		Unrealized
(in thousands)	Amortized Cost		Gains		Losses		Fair Value
December 31, 2020
Mortgage-backed securities:
US Government-sponsored enterprises	$	206,834	$	6,018	$	(462)	$	212,390
US Government agency		82,878		2,870		(116)		85,632
Private label		19,810		40		(141)		19,709
Obligations of states and political subdivisions thereof		164,766		4,244		(6)		169,004
Corporate bonds		97,689		1,465		(843)		98,311
Total securities available for sale	$	571,977	$	14,637	$	(1,568)	$	585,046

Credit Quality Information

The Company monitors the credit quality of available for sale debt securities through credit ratings from various rating agencies and substantial price changes. Credit ratings express opinions about the credit quality of a security and are utilized by the Company to make informed decisions.  Securities are triggered for further review in the quarter if the security has significant fluctuations in ratings, drops below investment grade, or significant pricing changes. For securities without credit ratings, the Company utilizes other financial information indicating the financial health of the underlying municipality, agency, or organization associated with the underlying security.

As of September 30, 2021 the Company carried no allowance on available for sale debt securities in accordance with ASU 2016-13.

The amortized cost and estimated fair value of available for sale securities segregated by contractual maturity at September 30, 2021 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.

	Available for sale
(in thousands)	Amortized Cost		Fair Value
Within 1 year	$	11,755	$	11,664
Over 1 year to 5 years		23,313		23,863
Over 5 years to 10 years		48,500		47,493
Over 10 years		157,879		161,419
Total bonds and obligations		241,447		244,439
Mortgage-backed securities		298,139		300,888
Total securities available for sale	$	539,586	$	545,327

The following table presents the gains and losses from the sale of AFS securities for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2021		2020		2021		2020
Gross gains on sales of available for sale securities	$	1,980	$	—	$	2,030	$	1,508
Gross losses on sales of available for sale securities		(50)		—		(50)		(22)
Net gains on sale of available for sale securities	$	1,930	$	—	$	1,980	$	1,486

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in thousands)	Losses		Value		Losses		Value		Losses		Value
September 30, 2021
Mortgage-backed securities:
US Government-sponsored enterprises	$	1,408	$	77,412	$	531	$	16,618	$	1,939	$	94,030
US Government agency		130		10,488		109		4,729		239		15,217
Private label		109		42,852		5		17		114		42,869
Obligations of states and political subdivisions thereof		827		48,355		—		—		827		48,355
Corporate bonds		14		2,486		633		11,617		647		14,103
Total securities available for sale	$	2,488	$	181,593	$	1,278	$	32,981	$	3,766	$	214,574

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in thousands)	Losses		Value		Losses		Value		Losses		Value
December 31, 2020
Mortgage-backed securities:
US Government-sponsored enterprises	$	209	$	40,285	$	253	$	4,323	$	462	$	44,608
US Government agency		45		6,776		71		3,297		116		10,073
Private label		—		—		141		19,514		141		19,514
Obligations of states and political subdivisions thereof		6		5,577		—		—		6		5,577
Corporate bonds		555		21,774		288		11,712		843		33,486
Total securities available for sale	$	815	$	74,412	$	753	$	38,846	$	1,568	$	113,258

The Company expects to recover its amortized cost basis on all securities in its AFS portfolio. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of September 30, 2021, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover.

The following summarizes, by investment security type, the impact of securities in an unrealized loss position for greater than 12 months at September 30, 2021:

US Government-sponsored enterprises

49 out of the total 528 securities in the Company’s portfolios of AFS US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 1.07% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association and Federal Home Loan Mortgage Corporation guarantee the contractual cash flows of all of the Company’s US Government-sponsored enterprises. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

US Government agency

11 out of the total 150 securities in the Company’s portfolios of AFS US Government agency securities were in unrealized loss positions. Aggregate unrealized losses represented 0.45% of the amortized cost of securities in unrealized loss positions. The Government National Mortgage Association guarantees the contractual cash flows of all of the Company’s US Government agency securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

Private label

14 of the total 31 securities in the Company’s portfolio of AFS private label mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 0.18% of the amortized cost of securities in unrealized loss positions. Based upon the expectation that the Company will receive all of the future contractual cash flows related to the amortized cost on these securities, the Company does not consider there to be any additional other-than-temporary impairment with respect to these securities.

Obligations of states and political subdivisions thereof

12 of the total 119 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.52% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for the risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

Corporate bonds

4 out of the total 27 securities in the Company’s portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 0.78% of the amortized cost of bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities. The most recent review includes all bond issuers and their current credit ratings, financial performance and capitalization.