Investment Securities

12 Months Ended

Dec. 31, 2020

5.	Investment Securities

The following tables summarize the amortized cost and fair value of available-for-sale securities at December 31, 2020 and 2019, and the corresponding amounts of gross unrealized and unrecognized gains and losses:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In Thousands)
2020
Available-for-sale
Obligations of U.S. government corporations and agencies	$	39,233	$	1,707	$	—		$	40,940
Mortgage-backed securities		270,683		6,746		(247	)		277,182
Collateralized mortgage obligations		103,532		2,927		(160	)		106,299
Asset-backed securities		30,643		1		(98	)		30,546
Corporate bonds		43,826		489		(146	)		44,169
Obligations of state and political subdivisions		229,645		8,069		(196	)		237,518
Total Available-for-Sale	$	717,562	$	19,939	$	(847	)	$	736,654

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In Thousands)
2019
Available-for-sale
Obligations of U.S. government corporations and agencies	$	2,518	$	6	$	—		$	2,524
Mortgage-backed securities - residential		88,380		1,380		(113	)		89,647
REMICs		1,618		18		—			1,636
Collateralized mortgage obligations - residential		81,390		796		(85	)		82,101
Corporate bonds		12,011		90		—			12,101
Obligations of state and political subdivisions		91,406		4,042		(9	)		95,439
Total Available-for-Sale	$	277,323	$	6,332	$	(207	)	$	283,448

The amortized cost and fair value of the investment securities portfolio at December 31, 2020, is shown below by contractual maturity. Expected maturities will differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. For purposes of the maturity tables below, mortgage-backed securities, collateralized mortgage obligations, and asset-backed securities which are not due at a single maturity date, have not been allocated over maturity groupings.

	Available-for-Sale
	Amortized		Fair
	Cost		Value
	(In Thousands)
Available-for-sale
Due in one year or less	$	9,656	$	9,711
Due after one year through five years		16,746		17,147
Due after five years through ten years		89,827		92,652
Due after ten years		196,475		203,117
MBS/CMO/ABS		404,858		414,027
Total	$	717,562	$	736,654

Securities pledged at year-end 2020 and 2019 had a carrying amount of $324.4 million and $158.8 million, respectively, and were pledged to secure public deposits, securities sold under repurchase agreements and FHLB advances.

The following table summarizes Premier’s securities that were in an unrealized loss position at December 31, 2020, and December 31, 2019:

	Duration of Unrealized Loss Position
	Less than 12 Months					12 Months or Longer				Total
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Loss			Value		Loss		Value		Loses
	(In Thousands)
At December 31, 2020
Available-for-sale securities:
Mortgage-backed securities	$	26,361	$	(247	)	$	—	$	—	$	26,361	$	(247	)
Collateralized mortgage obligations		5,161		(160	)		—		—		5,161		(160	)
Asset-backed securities		18,439		(98	)		—		—		18,439		(98	)
Corporate Bonds		12,177		(146	)		—		—		12,177		(146	)
Obligations of state and political subdivisions		41,088		(196	)		—		—		41,088		(196	)
Total temporarily impaired securities	$	103,226	$	(847	)	$	—	$	—	$	103,226	$	(847	)

At December 31, 2019
Available-for-sale securities:
Mortgage-backed securities-residential	$	13,830	$	(42	)	$	9,721	$	(71	)	$	23,551	$	(113	)
Collateralized mortgage obligations		7,448		(29	)		5,549		(56	)		12,997		(85	)
Obligations of state and political subdivisions		1,413		(9	)							1,413		(9	)
Total temporarily impaired securities	$	22,691	$	(80	)	$	15,270	$	(127	)	$	37,961	$	(207	)

ASU 2016-13 makes targeted improvements to the accounting for credit losses on securities available for sale. The concept of other than-temporarily impaired (OTTI) has been replaced in 2020 with the allowance for credit losses. Unlike securities held to maturity, securities available for sale are evaluated on an individual level and pooling of securities is not allowed.

Quarterly, the Company evaluates if any security has a fair value less than its amortized cost. Once these securities are identified, in order to determine whether a decline in fair value resulted from a credit loss or other factors, the Company performs further analysis as outlined below:

•

Review the extent to which the fair value is less than the amortized cost and observe the security’s lowest credit rating as reported by third-party credit ratings companies.

•

Any securities that are downgraded by a third party ratings company above would be subjected to additional analysis that may include, but is not limited to: changes in market interest rates, changes in securities credit ratings, security type, service area economic factors, financial performance of the issuer/or obligor of the underlying issue and third-party guarantee.

•

If the Company determines that a credit loss exists, the credit portion of the allowance will be measured using a DCF analysis using the effective interest rate as of the security’s purchase date. The amount of credit loss the Company records will be limited to the amount by which the amortized cost exceeds the fair value. As of December 31, 2020, management had determined that no credit loss exists.

In 2019 and 2018, management determined there was no OTTI.

Net realized gains from the sales of investment securities totaled $1.5 million ($1.2 million after tax) in 2020 while there were net realized gains of $24,000 ($19,000 after tax) and $173,000 ($136,000 after tax) in 2019 and 2018, respectively.

The proceeds from sales and calls of securities and the associated gains and losses for the years ended December 31 are listed below:

	2020			2019			2018
	(In Thousands)
Proceeds	$	52,420		$	2,667		$	5,503
Gross realized gains		1,471			35			178
Gross realized losses		(7	)		(11	)		(5	)