Securities Available-for-Sale

6 Months Ended

Jun. 30, 2019

Text Block [Abstract]

Securities Available-for-Sale

Note 3. Securities Available-for-Sale

	June 30, 2019								December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	2,000	$	—	$	8	$	1,992
U.S. Government Sponsored Enterprises		3,954		20		—		3,974		3,946		—		31		3,915
SBA Backed Securities		64,970		96		54		65,012		70,477		1		284		70,194
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		176,607		187		639		176,155		162,604		536		250		162,890
Privately Issued Residential Mortgage-Backed Securities		622		7		2		627		679		3		10		672
Obligations Issued by States and Political Subdivisions		41,946		56		—		42,002		93,445		58		—		93,503
Other Debt Securities		3,600		65		33		3,632		3,600		37		44		3,593
Total	$	291,699	$	431	$	728	$	291,402	$	336,751	$	635	$	627	$	336,759

Included in SBA Backed Securities, U.S. Government Sponsored Enterprise Securities and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities are securities at fair value pledged to secure public deposits and repurchase agreements amounting to $211,916,000 and $197,304,000 at June 30, 2109 and December 31, 2018, respectively. Also included in securities available-for-sale are securities at fair value pledged for borrowing at the Federal Home Loan Bank of Boston amounting to $33,224,000 and $34,787,000 at June 30, 2019 and December 31, 2018, respectively. The Company realized gross gains of $7,000 from the proceeds of $12,330,000 from the sales of available-for-sale securities for the six months ended June 30, 2019. The Company realized gross gains of $197,000 from the proceeds of $17,871,000 from the sales of available-for-sale securities for the six months ended June 30, 2018.

Debt securities of U.S. Government Sponsored Enterprises and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities primarily refer to debt securities of Fannie Mae and Freddie Mac.

The following table shows the maturity distribution of the Company’s securities available-for-sale at June 30, 2019.

	Amortized Cost		Fair Value
	(in thousands)
Within one year	$	39,726	$	39,725
After one but within five years		123,800		123,830
After five but within ten years		90,050		89,822
More than 10 years		38,123		38,025
Total	$	291,699	$	291,402

The weighted average remaining life of investment securities available-for-sale at June 30, 2019 was 5.3 years. Included in the weighted average remaining life calculation at June 30, 2019 were $3,954,000 of U.S. Government Sponsored Enterprises obligations that are callable at the discretion of the issuer. The contractual maturities, which were used in the table above, of mortgage-backed securities, will differ from the actual maturities, due to the ability of the issuers to prepay underlying obligations. Also $247,572,000 of the securities are floating rate or adjustable rate and reprice prior to maturity.

As of June 30, 2019 and December 31, 2018, management concluded that the unrealized losses of its investment securities are temporary in nature since they are not related to the underlying credit quality of the issuers, and the Company does not intend to sell these debt securities and it is not more likely than not that it will be required to sell these debt securities before the anticipated recovery of its remaining amortized cost. In making its other-than-temporary impairment evaluation, the Company considered that the principal and interest on these securities are from issuers that are investment grade. The change in the unrealized losses on the Obligations Issued by States and Political Subdivisions, Privately Issued Residential Mortgage-Backed Securities and Other Debt Securities was primarily caused by changes in credit spreads and liquidity issues in the marketplace.

The unrealized loss on SBA Backed Securities, U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities related primarily to interest rates and not credit quality, and because the Company has the ability and intent to hold these investments until recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at June 30, 2019 or December 31, 2018.

In evaluating the underlying credit quality of a security, management considers several factors such as the credit rating of the obligor and the issuer, if applicable. Internal reviews of issuer financial statements are performed as deemed necessary. In the case of privately issued mortgage-backed securities, the performance of the underlying loans is analyzed as deemed necessary to determine the estimated future cash flows of the securities. Factors considered include the level of subordination, current and estimated future default rates, current and estimated prepayment rates, estimated loss severity rates, geographic concentrations and origination dates of underlying loans.

The following table shows the temporarily impaired securities of the Company’s available-for-sale portfolio at June 30, 2019. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for less than 12 months and a continuous loss position for 12 months or longer. There are 20 and 21 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 160 holdings at June 30, 2019.

	June 30, 2019
	Less than 12 months				12 months or longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government Sponsored Enterprises		—		—		—		—		—		—
SBA Backed Securities		—		—		30,790		54		30,790		54
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		66,227		441		28,673		198		94,900		639
Privately Issued Residential Mortgage-Backed Securities		—		—		296		2		296		2
Obligations Issued by States and Political Subdivisions		—		—		—		—		—		—
Other Debt Securities		800		1		467		32		1,267		33
Total temporarily impaired securities	$	67,027	$	442	$	60,226	$	286	$	127,253	$	728

The following table shows the temporarily impaired securities of the Company’s available-for-sale portfolio at December 31, 2018. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for less than 12 months and a continuous loss position for 12 months or longer. There are 10 and 30 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 190 holdings at December 31, 2018.

	December 31, 2018
	Less than 12 months				12 months or longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury	$	—	$	—	$	1,992	$	8	$	1,992	$	8
U.S. Government Sponsored Enterprises		3,914		31		—		—		3,914		31
SBA Backed Securities		17,950		28		44,323		256		62,273		284
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		19,244		21		45,782		229		65,026		250
Privately Issued Residential Mortgage-Backed Securities		—		—		495		10		495		10
Obligations Issued by States and Political Subdivisions		—		—		—		—		—		—
Other Debt Securities		—		—		455		44		455		44
Total temporarily impaired securities	$	41,108	$	80	$	93,047	$	547	$	134,155	$	627