INVESTMENT SECURITIES

3 Months Ended

Mar. 31, 2021

3.	INVESTMENT SECURITIES

The amortized cost, unrealized gains and losses and estimated fair values of investments in debt and other securities at March 31, 2021 are summarized as follows:

(in thousands)	Amortized cost		Unrealized gains		Unrealized losses			Estimated fair value

Investment securities available-for-sale:
U.S. Treasury Securities	$	47,264	$	820	$	(155	)	$	47,929
Securities of U.S. government agencies and corporations		106,427		934		(2,129	)		105,232
Obligations of states and political subdivisions		29,891		1,407		(207	)		31,091
Collateralized mortgage obligations		74,735		1,796		(219	)		76,312
Mortgage-backed securities		203,486		3,486		(1,490	)		205,482
Total debt securities	$	461,803	$	8,443	$	(4,200	)	$	466,046

The amortized cost, unrealized gains and losses and estimated fair values of investments in debt and other securities at December 31, 2020 are summarized as follows:

(in thousands)	Amortized cost		Unrealized gains		Unrealized losses			Estimated fair value

Investment securities available-for-sale:
U.S. Treasury Securities	$	37,910	$	982	$	(1	)	$	38,891
Securities of U.S. government agencies and corporations		105,506		1,317		(265	)		106,558
Obligations of states and political subdivisions		31,013		1,878		(9	)		32,882
Collateralized mortgage obligations		71,531		1,937		(8	)		73,460
Mortgage-backed securities		179,021		4,359		(91	)		183,289
Total debt securities	$	424,981	$	10,473	$	(374	)	$	435,080

The Company had $9,393,000 and $20,044,000 proceeds from sales, calls and maturities of available-for-sale securities for the three months ended March 31, 2021 and March 31, 2020, respectively. Gross realized gains on sales/calls of available-for-sale securities were $25,000 and $84,000 for the three months ended March 31, 2021 and March 31, 2020, respectively. Gross realized losses on sales of available-for-sale securities were $35,000 and $46,000 for the three months ended March 31, 2021 and March 31, 2020, respectively.

The amortized cost and estimated fair value of debt and other securities at March 31, 2021, by contractual maturity, are shown in the following table:

(in thousands)	Amortized cost		Estimated fair value

Maturity in years:
Due in one year or less	$	17,585	$	17,746
Due after one year through five years		82,350		83,346
Due after five years through ten years		65,385		64,322
Due after ten years		18,262		18,838
Subtotal		183,582		184,252
MBS & CMO		278,221		281,794
Total	$	461,803	$	466,046

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. In addition, factors such as prepayments and interest rates may affect the yield on the carrying value of mortgage-related securities.

An analysis of gross unrealized losses of the available-for-sale investment securities portfolio as of March 31, 2021, follows:

	Less than 12 months					12 months or more				Total
(in thousands)	Fair Value		Unrealized losses			Fair Value		Unrealized losses		Fair Value		Unrealized losses

U.S. Treasury Securities		19,774		(155	)		—		—		19,774		(155	)
Securities of U.S. government agencies and corporations	$	71,221	$	(2,129	)	$	—	$	—	$	71,221	$	(2,129	)
Obligations of states and political subdivisions		8,336		(207	)		—		—		8,336		(207	)
Collateralized Mortgage obligations		11,024		(219	)		—		—		11,024		(219	)
Mortgage-backed securities		93,314		(1,490	)		—		—		93,314		(1,490	)
Total	$	203,669	$	(4,200	)	$	—	$	—	$	203,669	$	(4,200	)

No decline in value was considered “other-than-temporary” during the first three months of 2021. Ninety-three securities, all considered investment grade, which had an aggregate fair value of $203,669,000 and a total unrealized loss of $4,200,000 have been in an unrealized loss position for less than twelve months as of March 31, 2021. No securities have been in an unrealized loss position for more than twelve months as of March 31, 2021. The unrealized losses on the Company’s investment securities were caused by market conditions for these types of investments, particularly changes in risk-free interest rates. The Company does not intend to sell the securities and has concluded it is not more likely than not that the Company will be required to sell these securities prior to recovery of their anticipated cost basis. Therefore, the Company does not consider these investments to be other than temporarily impaired as of March 31, 2021.

The fair value of investment securities could decline in the future if the general economy deteriorates, inflation increases, credit ratings decline, the issuer’s financial condition deteriorates, or the liquidity for securities declines. As a result, other than temporary impairments may occur in the future. The coronavirus pandemic and the impact of governmental health measures in response thereto may increase the likelihood of such other than temporary impairments.

An analysis of gross unrealized losses of the available-for-sale investment securities portfolio as of December 31, 2020, follows:

	Less than 12 months					12 months or more				Total
(in thousands)	Fair Value		Unrealized losses			Fair Value		Unrealized losses		Fair Value		Unrealized losses

U.S. Treasury Securities	$	4,276	$	(1	)	$	—	$	—	$	4,276	$	(1	)
Securities of U.S. government agencies and corporations		58,164		(265	)		—		—		58,164		(265	)
Obligations of states and political subdivisions		1,603		(9	)		—		—		1,603		(9	)
Collateralized Mortgage obligations		1,697		(8	)		—		—		1,697		(8	)
Mortgage-backed securities		30,208		(91	)		—		—		30,208		(91	)
Total	$	95,948	$	(374	)	$	—	$	—	$	95,948	$	(374	)

Investment securities carried at $40,372,000 and $41,916,000 at March 31, 2021 and December 31, 2020, respectively, were pledged to secure public deposits or for other purposes as required or permitted by law.