SECURITIES

12 Months Ended

Dec. 31, 2020

SECURITIES.

SECURITIES

2. SECURITIES

The following table summarizes the amortized cost and estimated fair value of the available for sale and held to maturity investment securities portfolio at December 31, 2020 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses, respectively:

	December 31, 2020
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Available for sale:
State and municipal obligations	$	40,448	$	1,650	$	(10)	$	42,088
U.S. GSE residential mortgage-backed securities		111,398		1,843		(6)		113,235
U.S. GSE residential collateralized mortgage obligations		127,369		1,661		(226)		128,804
U.S. GSE commercial mortgage-backed securities		24,920		140		(253)		24,807
U.S. GSE commercial collateralized mortgage obligations		61,102		1,286		(52)		62,336
Other asset backed securities		24,250		—		(300)		23,950
Corporate bonds		56,500		195		(1,555)		55,140
Total available for sale		445,987		6,775		(2,402)		450,360
			Gross		Gross		Estimated
	Amortized		Unrecognized		Unrecognized		Fair
(In thousands)	Cost		Gains		Losses		Value
Held to maturity:
State and municipal obligations		23,715		1,406		—		25,121
U.S. GSE residential mortgage-backed securities		6,272		227		—		6,499
U.S. GSE residential collateralized mortgage obligations		18,511		489		(9)		18,991
U.S. GSE commercial mortgage-backed securities		13,069		625		—		13,694
U.S. GSE commercial collateralized mortgage obligations		24,133		887		—		25,020
Total held to maturity		85,700		3,634		(9)		89,325
Total securities	$	531,687	$	10,409	$	(2,411)	$	539,685

As of December 31, 2020, none of the Company’s available for sale debt securities were in an unrealized loss position due to credit and therefore no allowance for credit losses on available for sale debt securities was required. Additionally, the calculated allowance for credit losses on held to maturity securities was inconsequential given the high quality composition of the Company’s held to maturity portfolio and therefore no allowance for credit losses was recorded. Accrued interest receivable on securities totaling $1.4 million at December 31, 2020 was included in accrued interest receivable in the consolidated balance sheet and excluded from the amortized cost and estimated fair value totals in the table above.

The following table summarizes the amortized cost and estimated fair value of the available for sale and held to maturity investment securities portfolio at December 31, 2019 and the corresponding amounts of gross unrealized gains and losses therein:

	December 31, 2019
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Available for sale:
U.S. Treasury securities	$	50,833	$	—	$	(11)	$	50,822
U.S. GSE securities		5,000		—		(5)		4,995
State and municipal obligations		34,303		704		(43)		34,964
U.S. GSE residential mortgage-backed securities		84,550		609		(468)		84,691
U.S. GSE residential collateralized mortgage obligations		278,149		1,166		(1,464)		277,851
U.S. GSE commercial mortgage-backed securities		13,656		23		(70)		13,609
U.S. GSE commercial collateralized mortgage obligations		102,722		1,723		(289)		104,156
Other asset-backed securities		24,250		—		(849)		23,401
Corporate bonds		46,000		—		(2,198)		43,802
Total available for sale		639,463		4,225		(5,397)		638,291
Held to maturity:
State and municipal obligations		41,008		809		—		41,817
U.S. GSE residential mortgage-backed securities		8,142		5		(54)		8,093
U.S. GSE residential collateralized mortgage obligations		39,936		624		(62)		40,498
U.S. GSE commercial mortgage-backed securities		17,215		102		(82)		17,235
U.S. GSE commercial collateralized mortgage obligations		27,337		191		(144)		27,384
Total held to maturity		133,638		1,731		(342)		135,027
Total securities	$	773,101	$	5,956	$	(5,739)	$	773,318

The following table summarizes available for sale debt securities with gross unrealized losses for which an allowance for credit losses has not been recorded at December 31, 2020, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position:

	December 31, 2020
	Less than 12 months				Greater than 12 months
	Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses
Available for sale:
State and municipal obligations	$	5,310	$	(10)	$	—	$	—
U.S. GSE residential mortgage-backed securities		—		—		152		(6)
U.S. GSE residential collateralized mortgage obligations		55,832		(226)		—		—
U.S. GSE commercial mortgage-backed securities		14,994		(253)		—		—
U.S. GSE commercial collateralized mortgage obligations		11,755		(52)		—		—
Other asset backed securities		—		—		3,450		(300)
Corporate bonds		7,927		(73)		29,518		(1,482)
Total available for sale	$	95,818	$	(614)	$	33,120	$	(1,788)

The following table summarizes securities with gross unrealized losses at December 31, 2019, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position:

	December 31, 2019
	Less than 12 months				Greater than 12 months
	Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses
Available for sale:
U.S. Treasury securities	$	50,822	$	(11)	$	—	$	—
U.S. GSE securities		—		—		4,995		(5)
State and municipal obligations		4,982		(42)		76		(1)
U.S. GSE residential mortgage-backed securities		2,935		(30)		39,617		(438)
U.S. GSE residential collateralized mortgage obligations		81,377		(480)		93,403		(984)
U.S. GSE commercial mortgage-backed securities		6,648		(70)		—		—
U.S. GSE commercial collateralized mortgage obligations		28,710		(145)		9,614		(144)
Other asset-backed securities		—		—		23,401		(849)
Corporate bonds		—		—		43,802		(2,198)
Total available for sale	$	175,474	$	(778)	$	214,908	$	(4,619)
Held to maturity:
U.S. GSE residential mortgage-backed securities		—		—		7,268		(54)
U.S. GSE residential collateralized mortgage obligations		6,750		(17)		6,105		(45)
U.S. GSE commercial mortgage-backed securities		—		—		5,034		(82)
U.S. GSE commercial collateralized mortgage obligations		13,038		(57)		4,300		(87)
Total held to maturity	$	19,788	$	(74)	$	22,707	$	(268)

Other-Than-Temporary Impairment

Management evaluates available for sale debt securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At December 31, 2020, substantially all of the securities in an unrealized loss position had a variable interest rate and the cause of the temporary impairment was directly related to changes in interest rates. The Company generally views changes in fair value caused by changes in interest rates as temporary, which is consistent with its experience. Other asset backed securities are comprised of student loan backed bonds, which are guaranteed by the U.S. Department of Education for 97% to 100% of principal. Additionally, the bonds have credit support of 3% to 5% and have maintained their Aa3 Moody’s rating during the time the Bank has owned them. The corporate bonds within the portfolio have all maintained an investment grade rating by either Moody’s or Standard and Poor’s. None of the unrealized losses is related to credit losses. The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. The issuers continue to make timely principal and interest payments on the debt. The fair value is expected to recover as the securities approach maturity. Therefore, the Company does not consider these securities to be other-than-temporarily impaired at December 31, 2020.

Sales and Calls of Securities

There were $153.0 million of proceeds on sales of available for sale securities with gross gains of approximately $4.3 million and gross losses of approximately $0.8 million realized in 2020. There were $46.5 million of proceeds on sales of available for sale securities with gross gains of approximately $0.2 million realized in 2019. There were $230.4 million of proceeds on sales of available for sale securities with gross losses of approximately $7.9 million realized in 2018. There were $14.9 million, $20.3 million and $3.3 million of proceeds from calls of securities in 2020, 2019 and 2018, respectively.

Pledged Securities

Securities having a fair value of $402.8 million and $402.2 million at December 31, 2020 and 2019, respectively, were pledged to secure public deposits and FHLB and FRB overnight borrowings.

Trading Securities

The Company did not hold any trading securities during the years ended December 31, 2020 and 2019.

Restricted Securities

The Bank is a member of the FHLB of New York. Members are required to own a particular amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. The Bank is a member of the Atlantic Central Banker’s Bank (“ACBB”) and is required to own ACBB stock. The Bank is also a member of the FRB system and required to own FRB stock. FHLB, ACBB and FRB stock is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. The Bank owned $23.4 million and $32.9 million in FHLB, ACBB and FRB stock at December 31, 2020 and 2019, respectively. These amounts were reported as restricted securities in the consolidated balance sheets.

As of December 31, 2020 and 2019, there was no issuer, other than the U.S. Government and its sponsored entities, where the Bank had invested holdings that exceeded 10% of consolidated stockholders’ equity.

The following table summarizes the amortized cost and estimated fair value by contractual maturity of the available for sale and held to maturity investment securities portfolio at December 31, 2020. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	December 31, 2020
	Amortized		Estimated
(In thousands)	Cost		Fair Value
Maturity
Available for sale:
Within one year	$	4,131	$	4,116
One to five years		58,608		58,861
Five to ten years		38,415		38,597
Beyond ten years		344,833		348,786
Total	$	445,987	$	450,360
Held to maturity:
Within one year	$	1,885	$	1,902
One to five years		23,140		24,452
Five to ten years		11,535		12,144
Beyond ten years		49,140		50,827
Total	$	85,700	$	89,325