Securities

9 Months Ended

Sep. 30, 2021

Securities

Securities

NOTE 3: Securities

The Corporation’s debt securities, all of which are classified as available for sale, are summarized as follows:

	September 30, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. government agencies and corporations	$	63,271	$	73	$	(772)	$	62,572
Mortgage-backed securities		184,548		2,105		(533)		186,120
Obligations of states and political subdivisions		94,872		1,748		(315)		96,305
Corporate and other debt securities		18,290		190		(64)		18,416
	$	360,981	$	4,116	$	(1,684)	$	363,413

	December 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. government agencies and corporations	$	48,171	$	121	$	(10)	$	48,282
Mortgage-backed securities		120,664		3,165		(115)		123,714
Obligations of states and political subdivisions		100,405		2,436		(36)		102,805
Corporate and other debt securities		11,584		47		(43)		11,588
	$	280,824	$	5,769	$	(204)	$	286,389

The amortized cost and estimated fair value of securities at September 30, 2021, by the earlier of contractual maturity or expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.

	September 30, 2021
	Amortized
(Dollars in thousands)	Cost		Fair Value
Due in one year or less	$	62,145	$	62,010
Due after one year through five years		200,714		203,445
Due after five years through ten years		89,131		89,136
Due after ten years		8,991		8,822
	$	360,981	$	363,413

The following table presents the gross realized gains and losses on and the proceeds from the sales, maturities and calls of securities. There were no sales of securities during the three months ended September 30, 2021 or 2020. During the nine months ended September 30, 2021 and 2020, $2.30 million and $5.99 million of proceeds, respectively, were related to sales of securities.  

	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2021		2020		2021		2020
Realized gains from sales, maturities and calls of securities:
Gross realized gains	$	3	$	4	$	41	$	11
Gross realized losses		—		—		—		—
Net realized gains	$	3	$	4	$	41	$	11
Proceeds from sales, maturities, calls and paydowns of securities	$	29,798	$	30,288	$	85,293	$	101,068

The Corporation pledges securities primarily to secure public deposits and repurchase agreements. Securities with an aggregate amortized cost of $157.62 million and an aggregate fair value of $159.86 million were pledged at September 30, 2021. Securities with an aggregate amortized cost of $146.66 million and an aggregate fair value of $150.13 million were pledged at December 31, 2020.

Securities in an unrealized loss position at September 30, 2021, by duration of the period of the unrealized loss, are shown below.

	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. government agencies and corporations	$	46,809	$	724	$	1,451	$	48	$	48,260	$	772
Mortgage-backed securities		94,098		511		4,341		22		98,439		533
Obligations of states and political subdivisions		20,132		279		1,273		36		21,405		315
Corporate and other debt securities		9,077		64		—		—		9,077		64
Total temporarily impaired securities	$	170,116	$	1,578	$	7,065	$	106	$	177,181	$	1,684

There were 133 debt securities totaling $177.18 million of aggregate fair value considered temporarily impaired at September 30, 2021. The primary cause of the temporary impairments in the Corporation’s investments in debt securities was fluctuations in interest rates. The Corporation concluded that no other-than-temporary impairment existed in its securities portfolio at September 30, 2021, and no other-than-temporary impairment loss has been recognized in net income, based primarily on the fact that changes in fair value were caused primarily by fluctuations in interest rates, there were no securities with unrealized losses that were significant relative to their carrying amounts, securities with unrealized losses had generally high credit quality, the Corporation intends to hold these investments in debt securities to maturity and it is more-likely-than-not that the Corporation will not be required to sell these investments before a recovery of its investment, and issuers have continued to make timely payments of principal and interest. Additionally, the Corporation’s mortgage-backed securities are entirely issued by either U.S. government agencies or U.S. government-sponsored enterprises.  Collectively, these entities provide a guarantee, which is either explicitly or implicitly supported by the full faith and credit of the U.S. government, that investors in such mortgage-backed securities will receive timely principal and interest payments. 

Securities in an unrealized loss position at December 31, 2020, by duration of the period of the unrealized loss, are shown below.

	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. government agencies and corporations	$	12,719	$	10	$	—	$	—	$	12,719	$	10
Mortgage-backed securities		15,691		115		—		—		15,691		115
Obligations of states and political subdivisions		5,110		36		—		—		5,110		36
Corporate and other debt securities		4,271		43		—		—		4,271		43
Total temporarily impaired securities	$	37,791	$	204	$	—	$	—	$	37,791	$	204

The Corporation’s investment in restricted stock totaled $1.03 million at September 30, 2021 and consisted of FHLB stock.  Restricted stock is generally viewed as a long-term investment, which is carried at cost because there is no market for the stock other than the FHLBs. Therefore, when evaluating restricted stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing any temporary decline in value. The Corporation did not consider its investment in restricted stock to be other-than-temporarily impaired at September 30, 2021 and no impairment has been recognized.