Securities

6 Months Ended

Jun. 30, 2021

Securities [Abstract]

Securities

4. Securities

The amortized cost, estimated fair value and unrealized gains (losses) of AFS securities are as follows:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
As of June 30, 2021
Federal agency	$	248,470	$	-	$	4,810	$	243,660
State & municipal		58,347		201		480		58,068
Mortgage-backed:
Government-sponsored enterprises		615,554		12,456		2,418		625,592
U.S. government agency securities		57,786		2,167		62		59,891
Collateralized mortgage obligations:
Government-sponsored enterprises		411,168		6,179		773		416,574
U.S. government agency securities		92,824		2,241		-		95,065
Corporate		34,500		1,383		-		35,883
Total AFS securities	$	1,518,649	$	24,627	$	8,543	$	1,534,733
As of December 31, 2020
Federal agency	$	245,590	$	59	$	2,052	$	243,597
State & municipal		42,550		630		-		43,180
Mortgage-backed:
Government-sponsored enterprises		521,448		17,079		22		538,505
U.S. government agency securities		55,049		2,332		47		57,334
Collateralized mortgage obligations:
Government-sponsored enterprises		311,710		7,549		58		319,201
U.S. government agency securities		114,864		3,739		-		118,603
Corporate		27,500		778		-		28,278
Total AFS securities	$	1,318,711	$	32,166	$	2,179	$	1,348,698

There was no allowance for credit losses on AFS securities as of June 30, 2021 and December 31, 2020.

During the three and six months ended June 30, 2021 there were no gains or losses reclassified out of accumulated other comprehensive income (loss) (“AOCI”) and into earnings. During the three months ended June 30, 2020 there were no gains or losses reclassified out of AOCI and into earnings. During the six months ended June 30, 2020, there were $3 thousand of gross realized gains reclassified out of AOCI and into earnings. Included in net realized gains (losses) on AFS securities, the Company recorded gains from calls of approximately $3 thousand for the six months ended June 30, 2020.

The amortized cost, estimated fair value and unrealized gains (losses) of HTM securities are as follows:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
As of June 30, 2021
Federal agency	$	100,000	$	-	$	3,293	$	96,707
Mortgage-backed:
Government-sponsored enterprises		114,278		3,003		38		117,243
U.S. government agency securities		10,299		821		-		11,120
Collateralized mortgage obligations:
Government-sponsored enterprises		83,300		3,664		-		86,964
U.S. government agency securities		39,472		1,163		-		40,635
State & municipal		275,002		6,171		888		280,285
Total HTM securities	$	622,351	$	14,822	$	4,219	$	632,954
As of December 31, 2020
Federal agency	$	100,000	$	-	$	1,658	$	98,342
Mortgage-backed:
Government-sponsored enterprises		107,914		4,583		-		112,497
U.S. government agency securities		11,533		979		-		12,512
Collateralized mortgage obligations:
Government-sponsored enterprises		103,105		4,477		-		107,582
U.S. government agency securities		79,145		3,950		-		83,095
State & municipal		214,863		7,953		17		222,799
Total HTM securities	$	616,560	$	21,942	$	1,675	$	636,827

At June 30, 2021 and December 31, 2020, all of the mortgaged-backed HTM securities were comprised of U.S. government agency and Government-sponsored enterprises securities. There was no allowance for credit losses on HTM securities as of June 30, 2021 and December 31, 2020.

Included in net realized gains (losses), the Company recorded no gains from calls on HTM securities for the three months ended June 30, 2021 and approximately $15 thousand for the six months ended June 30, 2021. Included in net realized gains (losses), the Company recorded gains from calls on HTM securities of approximately $4 thousand for the three and six months ended June 30, 2020.

AFS and HTM securities with amortized costs totaling $1.6 billion at June 30, 2021 and $1.4 billion at December 31, 2020 were pledged to secure public deposits and for other purposes required or permitted by law. Additionally, at June 30, 2021 and December 31, 2020, AFS and HTM securities with an amortized cost of $164.5 million and $305.2 million, respectively, were pledged as collateral for securities sold under repurchase agreements.

The following tables set forth information with regard to gains and (losses) on equity securities:

	Three Months Ended June 30,
(In thousands)	2021		2020
Net gains and (losses) recognized on equity securities	$	201	$	177
Less: Net gains and (losses) recognized on equity securities sold during the period		-		-
Unrealized gains and (losses) recognized on equity securities still held	$	201	$	177

	Six Months Ended June 30,
(In thousands)	2021		2020
Net gains and (losses) recognized on equity securities	$	653	$	(638	)
Less: Net gains and (losses) recognized on equity securities sold during the period		-		-
Unrealized gains and (losses) recognized on equity securities still held	$	653	$	(638	)

As of June 30, 2021 and December 31, 2020, the carrying value of equity securities without readily determinable fair values was $1.0 million and $2.0 million, respectively. The Company performed a qualitative assessment to determine whether the investments were impaired and identified no areas of concern as of June 30, 2021 and 2020. There were no impairments, downward or upward adjustments recognized for equity securities without readily determinable fair values during the three months ended June 30, 2021 and 2020.

The following table sets forth information with regard to contractual maturities of debt securities at June 30, 2021:

(In thousands)	Amortized Cost		Estimated Fair Value
AFS debt securities:
Within one year	$	1,265	$	1,273
From one to five years		49,595		50,379
From five to ten years		589,435		589,990
After ten years		878,354		893,091
Total AFS debt securities	$	1,518,649	$	1,534,733
HTM debt securities:
Within one year	$	51,610	$	51,659
From one to five years		54,875		56,215
From five to ten years		227,013		229,266
After ten years		288,853		295,814
Total HTM debt securities	$	622,351	$	632,954

Maturities of mortgage-backed, collateralized mortgage obligations and asset-backed securities are stated based on their estimated average lives. Actual maturities may differ from estimated average lives or contractual maturities because, in certain cases, borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Except for U.S. Government securities and Government-sponsored enterprises securities, there were no holdings, when taken in the aggregate, of any single issuer that exceeded 10% of consolidated stockholders’ equity at June 30, 2021 and December 31, 2020.

The following table sets forth information with regard to investment securities with unrealized losses, for which an allowance for credit losses has not been recorded at June 30, 2021, segregated according to the length of time the securities had been in a continuous unrealized loss position:

	Less Than 12 Months							12 Months or Longer							Total
(In thousands)	Fair Value		Unrealized Losses			Number of Positions		Fair Value		Unrealized Losses			Number of Positions		Fair Value		Unrealized Losses			Number of Positions
As of June 30, 2021
AFS securities:
Federal agency	$	243,660	$	(4,810	)		16	$	-	$	-			-	$	243,660	$	(4,810	)		16
State & municipal		42,038		(480	)		27		-		-			-		42,038		(480	)		27
Mortgage-backed		250,767		(2,472	)		17		774		(8	)		4		251,541		(2,480	)		21
Collateralized mortgage obligations		118,506		(772	)		15		420		(1	)		1		118,926		(773	)		16
Total securities with unrealized losses	$	654,971	$	(8,534	)		75	$	1,194	$	(9	)		5	$	656,165	$	(8,543	)		80
HTM securities:
Federal agency	$	96,707	$	(3,293	)		4	$	-	$	-			-	$	96,707	$	(3,293	)		4
Mortgage-backed		7,710		(38	)		1		-		-			-		7,710		(38	)		1
State & municipal		47,425		(888	)		38		-		-			-		47,425		(888	)		38
Total securities with unrealized losses	$	151,842	$	(4,219	)		43	$	-	$	-			-	$	151,842	$	(4,219	)		43
As of December 31, 2020
AFS securities:
Federal agency	$	148,537	$	(2,052	)		10	$	-	$	-			-	$	148,537	$	(2,052	)		10
Mortgage-backed		47,269		(60	)		3		800		(9	)		4		48,069		(69	)		7
Collateralized mortgage obligations		17,837		(58	)		6		-		-			-		17,837		(58	)		6
Total securities with unrealized losses	$	213,643	$	(2,170	)		19	$	800	$	(9	)		4	$	214,443	$	(2,179	)		23
HTM securities:
Federal agency	$	98,342	$	(1,658	)		4	$	-	$	-			-	$	98,342	$	(1,658	)		4
State & municipal		4,805		(17	)		5		-		-			-		4,805		(17	)		5
Total securities with unrealized losses	$	103,147	$	(1,675	)		9	$	-	$	-			-	$	103,147	$	(1,675	)		9

The Company does not believe the AFS securities that were in an unrealized loss position as of June 30, 2021 and December 31, 2020, which consisted of 80 and 23 individual securities, respectively, represented a credit loss impairment. AFS debt securities in unrealized loss positions are evaluated for impairment related to credit losses at least quarterly. As of June 30, 2021 and December 31, 2020, the majority of the AFS securities in an unrealized loss position consisted of debt securities issued by U.S. government agencies or U.S. government-sponsored enterprises that carry the explicit and/or implicit guarantee of the U.S. government, which are widely recognized as “risk-free” and have a long history of zero credit losses. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. The Company does not intend to sell, nor is it more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may be at maturity. The Company elected to exclude accrued interest receivable (“AIR”) from the amortized cost basis of debt securities. AIR on AFS debt securities totaled $3.5 million at June 30, 2021 and $3.3 million at December 31, 2020 and is excluded from the estimate of credit losses and reported in the financial statement line for other assets.

None of the bank’s HTM debt securities were past due or on non-accrual status as of June 30, 2021 and December 31, 2020. There was no accrued interest reversed against interest income for the three and six months ended June 30, 2021 or the year-ended December 31, 2020 as all securities remained on accrual status. In addition, there were no collateral-dependent HTM debt securities as of June 30, 2021 and December 31, 2020. As of June 30, 2021 and December 31, 2020, 56% and 65%, respectively, of the Company’s HTM debt securities were issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as “risk free,” and have a long history of zero credit loss. Therefore, the Company did not record an allowance for credit losses for these securities as of June 30, 2021 and December 31, 2020. The remaining HTM debt securities at June 30, 2021 and December 31, 2020 were comprised of state and municipal obligations with bond ratings of A to AAA. Utilizing the Current Expected Credit Losses (“CECL”) approach, the Company determined that the expected credit loss on its HTM municipal bond portfolio was immaterial and therefore no allowance for credit loss was recorded as of June 30, 2021 and December 31, 2020. AIR on HTM debt securities totaled $2.6 million and $2.7 million at June 30, 2021 and December 31, 2020, respectively, and is excluded from the estimate of credit losses and reported in the other assets financial statement line.