Investment Securities

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

The amortized cost and fair value of investment securities are shown in the following tables. Management performs a quarterly evaluation of investment securities for any other-than-temporary impairment. For the three-month and nine-month periods ended September 30, 2020 and 2019, there were no investment securities deemed to be other-than-temporarily impaired.

Investment securities at September 30, 2020, were as follows:


Debt securities AFS (In thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
Obligations of states and political subdivisions	$	279,810	$	24,696	$	—	$	304,506
U.S. Government sponsored entities' asset-backed securities	698,237		28,092		32		726,297
Corporate debt securities	2,000		11		—		2,011
Total	$	980,047	$	52,799	$	32	$	1,032,814

Investment securities in an unrealized loss position at September 30, 2020, were as follows:


	Unrealized loss position for less than 12 months				Unrealized loss position for 12 months or longer				Total
(In thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Debt securities AFS
U.S. Government sponsored entities' asset-backed securities	$	—	$	—	$	5,330	$	32	$	5,330	$	32
Total	$	—	$	—	$	5,330	$	32	$	5,330	$	32

Investment securities at December 31, 2019, were as follows:


Debt securities AFS (In thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
Obligations of states and political subdivisions	$	302,928	$	17,563	$	—	$	320,491
U.S. Government sponsored entities' asset-backed securities	884,571		10,862		6,223		889,210
Total	$	1,187,499	$	28,425	$	6,223	$	1,209,701

Investment securities in an unrealized loss position at December 31, 2019, were as follows:


	Unrealized loss position for less than 12 months				Unrealized loss position for 12 months or longer				Total
(In thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Debt securities AFS
U.S. Government sponsored entities' asset-backed securities	$	237,613	$	1,106	$	171,805	$	5,117	$	409,418	$	6,223
Total	$	237,613	$	1,106	$	171,805	$	5,117	$	409,418	$	6,223

Management does not believe any of the unrealized losses at September 30, 2020 or December 31, 2019 represented other-than-temporary impairment. The unrealized losses are primarily the result of interest rate changes. These conditions will not prohibit Park from receiving its contractual principal and interest payments on these debt securities. The fair value of these debt securities is expected to recover as payments are received on these debt securities and they approach maturity. Should the impairment of any of these debt securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss attributable to credit will be recognized in net income in the period the other-than-temporary impairment is identified.

Park’s U.S. Government sponsored entities' asset-backed securities consist primarily of 15-year residential mortgage-backed securities and collateralized mortgage obligations.

The amortized cost and estimated fair value of investments in debt securities at September 30, 2020, are shown in the following table by contractual maturity, except for asset-backed securities, which are shown as a single total, due to the unpredictability of the timing of principal repayments.


Debt securities AFS (In thousands)	Amortized cost		Fair value		Tax equivalent yield (1)

U.S. Government sponsored entities' asset-backed securities	$	698,237	$	726,297	2.37	%

Corporate debt securities
Due five through ten years	$	2,000	$	2,011	4.00	%

Obligations of state and political subdivisions:
Due five through ten years	$	58,800	$	64,264	3.81	%
Due over ten years	221,010		240,242		3.67	%
Total (1)	$	279,810	$	304,506	3.70	%

(1) The tax equivalent yield for certain obligations of state and political subdivisions includes the effects of a taxable equivalent adjustment using a 21% federal corporate income tax rate.

During the three months ended September 30, 2020, Park sold certain AFS debt securities with a book value of $140.9 million at a gross gain of $37,000, and sold certain AFS debt securities with a book value of $112.5 million at a gross loss of $64,000.

During the nine months ended September 30, 2020, Park sold certain AFS debt securities with a book value of $196.4 million at a gross gain of $3.4 million and sold certain AFS debit securities with a book value of $112.5 million at a gross loss of $64,000. During the three months ended September 30, 2019, Park sold certain AFS debt securities with a book value of $10.7 million at a gross loss of $67,000 and sold certain AFS debt securities with a book value of $23.8 million at a gross gain of $253,000. During the nine months ended September 30, 2019, Park sold certain AFS debt securities with a book value of $62.4 million at a gross loss of $692,000 and sold certain AFS debt securities with a book value of $29.1 million at a gross gain of $271,000.

On September 1, 2019, Park adopted the portion of ASU 2019-04 which allowed for a one-time reclassification of securities from HTM to AFS. On this date, Park transferred HTM securities with a fair value of $373.9 million to AFS classification. The transfer occurred at fair value and had a related unrealized gain, net of taxes, of $19.1 million recorded in other comprehensive income.

Investment securities having an amortized cost of $688 million and $585 million at September 30, 2020 and December 31, 2019, respectively, were pledged to collateralize government and trust department deposits in accordance with federal and state requirements, to secure repurchase agreements sold and as collateral for FHLB advance borrowings.