Investment Securities

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Investments Securities

Investment Securities

The following table shows the amortized cost, the estimated fair value and the allowance for credit losses of the held-to-maturity securities and available-for-sale securities at June 30, 2022 and December 31, 2021, by contractual maturity within each type:

	At June 30, 2022
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Securities Held-to-Maturity
U.S. government corporations and agencies:
Within 1 year	$	2,000	$	1	$	—	$	—	$	2,001
	2,000		1		—		—		2,001
Residential mortgage-backed securities:
After 1 year to 5 years	2,016		—		(31)		—		1,985
After 5 years to 10 years	4,440		—		(66)		—		4,374
Over 10 years	151,352		10		(13,930)		—		137,432
	157,808		10		(14,027)		—		143,791
Total	$	159,808	$	11	$	(14,027)	$	—	$	145,792
Securities Available-for-Sale
State and political subdivisions:
After 1 year to 5 years	$	2,326	$	1	$	(22)	$	—	$	2,305
	2,326		1		(22)		—		2,305
Residential mortgage-backed securities:
Within 1 year	10		—		—		—		10
After 1 year to 5 years	1,032		—		(16)		—		1,016
After 5 years to 10 years	2,591		—		(56)		—		2,535
Over 10 years	289,578		62		(30,258)		—		259,382
	293,211		62		(30,330)		—		262,943
Collateralized mortgage obligations:
After 5 years to 10 years	388		—		(15)		—		373
Over 10 years	2,473		—		(141)		—		2,332
	2,861		—		(156)		—		2,705
Corporate bonds:
Within 1 year	500		—		—		—		500
After 1 year to 5 years	30,686		9		(942)		(215)		29,538
After 5 years to 10 years	60,000		—		(5,132)		(1,477)		53,391
	91,186		9		(6,074)		(1,692)		83,429
Total	$	389,584	$	72	$	(36,582)	$	(1,692)	$	351,382

	At December 31, 2021
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Securities Held-to-Maturity
U.S. government corporations and agencies:
Within 1 year	$	6,999	$	34	$	—	$	—	$	7,033
	6,999		34		—		—		7,033
Residential mortgage-backed securities:
After 5 years to 10 years	5,208		194		—		—		5,402
Over 10 years	164,776		2,175		(984)		—		165,967
	169,984		2,369		(984)		—		171,369
Total	$	176,983	$	2,403	$	(984)	$	—	$	178,402
Securities Available-for-Sale
State and political subdivisions:
After 1 year to 5 years	$	2,326	$	7	$	—	$	—	$	2,333
	2,326		7		—		—		2,333
Residential mortgage-backed securities:
Within 1 year	31		—		—		—		31
After 1 year to 5 years	153		5		—		—		158
After 5 years to 10 years	2,286		82		—		—		2,368
Over 10 years	220,153		671		(2,276)		—		218,548
	222,623		758		(2,276)		—		221,105
Collateralized mortgage obligations:
After 5 years to 10 years	481		7		—		—		488
Over 10 years	2,813		—		(23)		—		2,790
	3,294		7		(23)		—		3,278
Corporate bonds:
Within 1 year	2,500		4		—		—		2,504
After 1 year to 5 years	28,731		755		(67)		(51)		29,368
After 5 years to 10 years	60,000		—		(703)		(878)		58,419
	91,231		759		(770)		(929)		90,291
Total	$	319,474	$	1,531	$	(3,069)	$	(929)	$	317,007

Expected maturities may differ from contractual maturities because debt issuers may have the right to call or prepay obligations without call or prepayment penalties and mortgage-backed securities typically prepay at a rate faster than contractually due.

Securities with a carrying value of $414.2 million and $281.7 million at June 30, 2022 and December 31, 2021, respectively, were pledged to secure public funds deposits and other contractual obligations. There were no pledged securities to secure credit derivatives and interest rate swaps at June 30, 2022. Securities of $23.0 million were pledged to secure credit derivatives and interest rate swaps at December 31, 2021. See Note 11, "Derivative Instruments and Hedging Activities" for additional information.

The following table presents information related to sales of securities available-for-sale during the six months ended June 30, 2022 and 2021:

	Six Months Ended June 30,
(Dollars in thousands)	2022		2021
Securities available-for-sale:
Proceeds from sales	$	1,530	$	3,115
Gross realized gains on sales	30		119
Tax expense related to net realized gains on sales	6		25

At June 30, 2022 and December 31, 2021, there were no reportable investments in any single issuer representing more than 10% of shareholders’ equity.

The following table shows the fair value of securities that were in an unrealized loss position for which an allowance for credit losses has not been recorded at June 30, 2022 and December 31, 2021, by the length of time those securities were in a continuous loss position.

	Less than Twelve Months				Twelve Months or Longer				Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At June 30, 2022
Securities Held-to-Maturity
Residential mortgage-backed securities	$	133,647	$	(12,813)	$	6,785	$	(1,214)	$	140,432	$	(14,027)
Total	$	133,647	$	(12,813)	$	6,785	$	(1,214)	$	140,432	$	(14,027)
Securities Available-for-Sale
State and political subdivisions	$	1,275	$	(22)	$	—	$	—	$	1,275	$	(22)
Residential mortgage-backed securities	211,750		(22,634)		44,733		(7,696)		256,483		(30,330)
Collateralized mortgage obligations	2,705		(156)		—		—		2,705		(156)
Total	$	215,730	$	(22,812)	$	44,733	$	(7,696)	$	260,463	$	(30,508)
At December 31, 2021
Securities Held-to-Maturity
Residential mortgage-backed securities	$	89,837	$	(984)	$	—	$	—	$	89,837	$	(984)
Total	$	89,837	$	(984)	$	—	$	—	$	89,837	$	(984)
Securities Available-for-Sale
Residential mortgage-backed securities	$	164,326	$	(1,816)	$	12,097	$	(460)	$	176,423	$	(2,276)
Collateralized mortgage obligations	2,790		(23)		—		—		2,790		(23)
Corporate bonds	779		(1)		—		—		779		(1)
Total	$	167,895	$	(1,840)	$	12,097	$	(460)	$	179,992	$	(2,300)

At June 30, 2022, the fair value of held-to-maturity securities in an unrealized loss position for which an allowance for credit losses has not been recorded was $140.4 million, including unrealized losses of $14.0 million. These holdings were comprised of seventy-six federal agency mortgage-backed securities, which are U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The Corporation did not recognize any credit losses on held-to-maturity debt securities for the six months ended June 30, 2022. Accrued interest receivable on held-to-maturity debt securities totaled $345 thousand at June 30, 2022 and is included within Accrued interest receivable and other assets on the condensed consolidated balance sheet. This amount is excluded from the estimate of expected credit losses.

At June 30, 2022, the fair value of available-for-sale securities in an unrealized loss position for which an allowance for credit losses has not been recorded was $260.5 million, including unrealized losses of $30.5 million. These holdings were comprised of (1) ninety-seven federal agency mortgage-backed securities, which are U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses, (2) two collateralized mortgage obligation bonds and (3) one state and political subdivisions bond. The Corporation does not intend to sell the securities in an unrealized loss position and is unlikely to be required to sell these securities before a recovery of fair value, which may be maturity. The Corporation concluded that the decline in fair value of these securities was not indicative of a credit loss. Accrued interest receivable on available-for-sale debt securities totaled $874 thousand at June 30, 2022 and is included within Accrued interest receivable and other assets on the condensed consolidated balance sheet. This amount is excluded from the estimate of expected credit losses.

The table below presents a rollforward by major security type for the six months ended June 30, 2022 of the allowance for credit losses on securities available-for-sale.

(Dollars in thousands)	Corporate Bonds
Six months ended June 30, 2022
Securities Available-for-Sale
Beginning balance	$	(929)
Additions for securities for which no previous expected credit losses were recognized	(147)
Change in securities for which a previous expected credit loss was recognized	(616)
Ending balance	$	(1,692)
Six months ended June 30, 2021
Securities Available-for-Sale
Beginning balance	$	(869)
Additions for securities for which no previous expected credit losses were recognized	(19)
Change in securities for which a previous expected credit loss was recognized	403
Ending balance	$	(485)

At June 30, 2022, the fair value of available-for-sale securities in an unrealized loss position for which an allowance for credit losses has been recorded was $82.0 million, including unrealized losses of $7.8 million, and allowance for credit losses of $1.7 million. These holdings were comprised of thirty-eight investment grade corporate bonds which fluctuate in value based on changes in market conditions. For these securities, fluctuations were primarily due to changes in the interest rate environment. The Corporation does not have the intent to sell these securities and it is not likely that it will be required to sell the securities before their anticipated recovery. The underlying issuers continue to make timely principal and interest payments on the securities.

The Corporation recognized a $197 thousand net loss and a $139 thousand net gain on equity securities during the six months ended June 30, 2022 and 2021, respectively, in other noninterest income. There were no sales of equity securities during the six months ended June 30, 2022 or 2021.