At March 31, 2021, the Company had $1.22 billion and $447.9 million in available for sale debt securities and held to maturity debt securities, respectively. Many factors, including lack of liquidity in the secondary market for certain securities, variations in pricing information, regulatory actions, changes in the business environment or any changes in the competitive marketplace could have an adverse effect on the Company’s investment portfolio. The total number of available for sale and held to maturity debt securities in an unrealized loss position at March 31, 2021 totaled 122, compared with 49 at December 31, 2020. The increase in the number of securities in an unrealized loss position at March 31, 2021 was due to higher current market interest rates compared to rates at December 31, 2020.

On January 1, 2020, the Company adopted CECL which replaces the incurred loss methodology with an expected loss methodology. The Company did not record an allowance for credit losses on available for sale debt securities as this portfolio consisted primarily of debt securities explicitly or implicitly backed by the U.S. Government for which credit risk is deemed immaterial. The impact going forward will depend on the composition, characteristics, and credit quality of the securities portfolio as well as the economic conditions at future reporting periods. The Company recorded a $70,000 increase to the allowance for credit losses on held to maturity debt securities with a corresponding cumulative effect adjustment to decrease retained earnings by $52,000, net of income taxes. (See Adoption of CECL table below for additional detail.)

Management measures expected credit losses on held to maturity debt securities on a collective basis by security type. Management classifies the held to maturity debt securities portfolio into the following security types:

All of the agency obligations held by the Company are issued by U.S. government entities and agencies. These securities 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 majority of the state and municipal, and corporate obligations carry no lower than A ratings from the rating agencies at March 31, 2021 and the Company had one security rated with a triple-B by Moody’s Investors Service.

The Company adopted CECL using the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after the effective date of CECL.

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the fair value for available for sale debt securities at March 31, 2021 and December 31, 2020 (in thousands):


	March 31, 2021
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Fair value



Mortgage-backed securities	$	1,042,480	23,915	(6,243)	1,060,152
Asset-backed securities	47,329		1,876	—	49,205
State and municipal obligations	69,443		429	(938)	68,934
Corporate obligations	38,149		739	(243)	38,645

	$	1,197,401	26,959	(7,424)	1,216,936


	December 31, 2020
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Fair value


Agency obligations	$	1,001	8	—	1,009
Mortgage-backed securities	910,393		28,872	(852)	938,413
Asset-backed securities	52,295		1,535	—	53,830
State and municipal obligations	69,687		1,666	(95)	71,258
Corporate obligations	40,194		809	(24)	40,979

	$	1,073,570	32,890	(971)	1,105,489

The amortized cost and fair value of available for sale debt securities at March 31, 2021, by contractual maturity, are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.


	March 31, 2021
	Amortized cost		Fair value
Due in one year or less	$	—	—
Due after one year through five years	3,651		3,761
Due after five years through ten years	38,002		38,532
Due after ten years	65,939		65,286
	$	107,592	107,579

Investments which pay principal on a periodic basis totaling $1.09 billion at amortized cost and $1.11 billion at fair value are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.

For the three months ended March 31, 2021, proceeds from sales on securities in the available for sale debt securities portfolio totaled $9.4 million, with gains of $230,000 and no loss recognized. No securities were sold or called from the available for sale debt securities portfolio for the three month periods ended March 31, 2020.

The following tables present the fair values and gross unrealized losses for available for sale debt securities in an unrealized loss position at March 31, 2021 and December 31, 2020 (in thousands):


	March 31, 2021
	Less than 12 months			12 months or longer		Total
	Fair value		Gross unrealized losses	Fair value	Gross unrealized losses	Fair value	Gross unrealized losses


Mortgage-backed securities	$	345,988	(6,209)	8,110	(34)	354,098	(6,243)

State and municipal obligations	40,517		(938)	—	—	40,517	(938)
Corporate obligations	6,655		(243)	—	—	6,655	(243)
	$	393,160	(7,390)	8,110	(34)	401,270	(7,424)


	December 31, 2020
	Less than 12 months			12 months or longer		Total
	Fair value		Gross unrealized losses	Fair value	Gross unrealized losses	Fair value	Gross unrealized losses



Mortgage-backed securities	$	127,600	(824)	8,007	(28)	135,607	(852)
State and municipal obligations	5,275		(95)	—	—	5,275	(95)
Corporate obligations	—		—	2,000	(24)	2,000	(24)
	$	132,875	(919)	10,007	(52)	142,882	(971)

The number of available for sale debt securities in an unrealized loss position at March 31, 2021 totaled 81, compared with 42 at December 31, 2020. The increase in the number of securities in an unrealized loss position at March 31, 2021 was due to higher current market interest rates compared to rates at December 31, 2020. At March 31, 2021, there was one private label mortgage-backed security in an unrealized loss position, with an amortized cost of $17,445 and unrealized loss of $690. This private-label mortgage-backed security was investment grade at March 31, 2021.

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses, allowance for credit losses and the estimated fair value for held to maturity debt securities at March 31, 2021 and December 31, 2020 (in thousands):


	March 31, 2021
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Fair value
Agency obligations	$	8,998	1	(95)	8,904
Mortgage-backed securities	50		1	—	51
State and municipal obligations	428,631		16,970	(825)	444,776
Corporate obligations	10,300		65	(103)	10,262
	$	447,979	17,037	(1,023)	463,993


	December 31, 2020
	Amortized cost		Gross unrealized gains	Gross unrealized losses	Fair value
Agency obligations	$	7,600	6	(5)	7,601
Mortgage-backed securities	62		2	—	64
State and municipal obligations	433,655		21,442	(58)	455,039
Corporate obligations	9,726		101	(2)	9,825
	$	451,043	21,551	(65)	472,529

The Company generally purchases securities for long-term investment purposes, and differences between amortized cost and fair value may fluctuate during the investment period. There were no sales of securities from the held to maturity debt securities portfolio for the three months ended March 31, 2021 and 2020. For the three months ended March 31, 2021, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $6.8 million with gross losses of $33,000 and no gross gains. For the three months ended March 31, 2020, proceeds from calls of securities in the held to maturity debt securities portfolio totaled $13.3 million with gross gains of $11,000 and no gross losses.

The amortized cost and fair value of investment securities in the held to maturity debt securities portfolio at March 31, 2021 by contractual maturity are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.


	March 31, 2021
	Amortized cost		Fair value
Due in one year or less	$	—	—
Due after one year through five years	163,682		167,460
Due after five years through ten years	213,875		224,327
Due after ten years	70,372		72,155
	$	447,929	463,942

Mortgage-backed securities totaling $50,000 at amortized cost and $51,000 at fair value are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments. Additionally, allowance for credit losses totaling $77,000 is excluded from the table above.


	January 1, 2020
	As reported under CECL		Prior to CECL	Impact of CECL adoption
Held to Maturity Debt Securities
Allowance for credit losses on corporate securities	$	6	—	6
Allowance for credit losses on municipal securities	64		—	64
Allowance for credit losses on held to maturity debt securities	$	70	—	70

The following tables present the fair values and gross unrealized losses for held to maturity debt securities in an unrealized loss position at March 31, 2021 and December 31, 2020 (in thousands):


	March 31, 2021 Unrealized Losses
	Less than 12 months			12 months or longer		Total
	Fair value		Gross unrealized losses	Fair value	Gross unrealized losses	Fair value	Gross unrealized losses
Agency obligations	$	6,903	(95)	—	—	6,903	(95)
State and municipal obligations	19,697		(809)	406	(16)	20,103	(825)
Corporate obligations	6,146		(103)	—	—	6,146	(103)
	$	32,746	(1,007)	406	(16)	33,152	(1,023)


	December 31, 2020 Unrealized Losses
	Less than 12 months			12 months or longer		Total
	Fair value		Gross unrealized losses	Fair value	Gross unrealized losses	Fair value	Gross unrealized losses
Agency obligations	$	1,995	(5)	—	—	1,995	(5)
State and municipal obligations	4,846		(41)	406	(17)	5,252	(58)
Corporate obligations	786		(2)	—	—	786	(2)
	$	7,627	(48)	406	(17)	8,033	(65)

The number of held to maturity debt securities in an unrealized loss position at March 31, 2021 totaled 41, compared with 7 at December 31, 2020. The increase in the number of securities in an unrealized loss position at March 31, 2021, was due to higher current market interest rates compared to prevailing market rates at December 31, 2020.


	March 31, 2021
Total Portfolio	AAA		AA	A	BBB	Not Rated	Total
Agency obligations	$	8,998	—	—	—	—	8,998
Mortgage-backed securities	50		—	—	—	—	50
State and municipal obligations	57,207		308,572	51,678	1,115	10,059	428,631
Corporate obligations	—		3,087	7,188	—	25	10,300
	$	66,255	311,659	58,866	1,115	10,084	447,979

	December 31, 2020
Total Portfolio	AAA		AA	A	BBB	Not Rated	Total
Agency obligations	$	7,600	—	—	—	—	7,600
Mortgage-backed securities	62		—	—	—	—	62
State and municipal obligations	57,830		311,155	53,302	1,115	10,253	433,655
Corporate obligations	—		3,255	6,446	—	25	9,726
	$	65,492	314,410	59,748	1,115	10,278	451,043

Credit quality indicators are metrics that provide information regarding the relative credit risk of debt securities. At March 31, 2021, the held to maturity debt securities portfolio was comprised of 15% rated AAA, 70% rated AA, 13% rated A, and less than 2% either below an A rating or not rated by Moody’s Investors Service or Standard and Poor’s. Securities not explicitly rated were grouped where possible under the credit rating of the issuer of the security.