Securities

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Available-for-Sale Debt and Equity Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of period end available-for-sale debt and equity securities consisted of the following:


	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(Dollars in thousands)
Available-for-sale debt securities
Mortgage-backed - GSE residential	$	139,615	$	4,983	$	—	$	144,598
Collateralized mortgage obligations - GSE residential	94,189		1,472		20		95,641
State and political subdivisions	429,603		26,966		255		456,314
Corporate bonds	1,212		86		4		1,294
Total available-for-sale debt securities	664,619		33,507		279		697,847
Equity securities
Mutual funds	2,183		53		—		2,236
Total equity securities	2,183		53		—		2,236
Total available-for-sale securities	$	666,802	$	33,560	$	279	$	700,083


	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(Dollars in thousands)
Available-for-sale debt securities
Mortgage-backed - GSE residential	$	151,037	$	1,668	$	193	$	152,512
Collateralized mortgage obligations - GSE residential	128,876		625		289		129,212
State and political subdivisions	436,448		19,996		104		456,340
Corporate bonds	1,321		88		—		1,409
Total available-for-sale debt securities	717,682		22,377		586		739,473
Equity securities
Mutual funds	2,190		—		29		2,161
Total equity securities	2,190		—		29		2,161
Total available-for-sale securities	$	719,872	$	22,377	$	615	$	741,634

The carrying value of securities pledged as collateral was $56 million and $41 million at June 30, 2020 and December 31, 2019, respectively.

The amortized cost and fair value of available-for-sale debt securities at June 30, 2020, by contractual maturity, are shown below:


	June 30, 2020
	Within			After One to			After Five to			After
	One Year			Five Years			Ten Years			Ten Years			Total
	(Dollars in thousands)
Available-for-sale debt securities
Mortgage-backed - GSE residential⁽¹⁾
Amortized cost	$	—		$	56		$	220		$	139,339		$	139,615
Estimated fair value	$	—		$	57		$	236		$	144,305		$	144,598
Weighted average yield⁽²⁾	—		%	4.55		%	3.91		%	2.04		%	2.04		%
Collateralized mortgage obligations - GSE residential⁽¹⁾
Amortized cost	$	—		$	—		$	2,507		$	91,682		$	94,189
Estimated fair value	$	—		$	—		$	2,755		$	92,886		$	95,641
Weighted average yield⁽²⁾	—		%	—		%	2.77		%	1.62		%	1.65		%
State and political subdivisions
Amortized cost	$	653		$	7,234		$	61,170		$	360,546		$	429,603
Estimated fair value	$	656		$	7,419		$	66,034		$	382,205		$	456,314
Weighted average yield⁽²⁾	8.24		%	5.33		%	3.58		%	3.10		%	3.22		%
Corporate bonds
Amortized cost	$	—		$	345		$	867		$	—		$	1,212
Estimated fair value	$	—		$	358		$	936		$	—		$	1,294
Weighted average yield⁽²⁾	—		%	5.89		%	5.68		%	—		%	5.74		%
Total available-for-sale debt securities
Amortized cost	$	653		$	7,635		$	64,764		$	591,567		$	664,619
Estimated fair value	$	656		$	7,834		$	69,961		$	619,396		$	697,847
Weighted average yield⁽²⁾	8.24		%	5.34		%	3.53		%	2.63		%	2.75		%
⁽¹⁾ Actual maturities may differ from contractual maturities because issuers may have the rights to call or prepay obligations with or without prepayment penalties.
⁽²⁾Yields are calculated based on amortized cost.

The following tables show gross unrealized losses, the number of securities that are in an unrealized loss position, and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired (“OTTI”), aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2020 and December 31, 2019:


	June 30, 2020
	Less than 12 Months									12 Months or More						Total
	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities
	(Dollars in thousands)
Available-for-Sale Debt Securities
Mortgage-backed - GSE residential	$	—	$	—	—	$	—	$	—	—	$	—	$	—	—
Collateralized mortgage obligations - GSE residential	12,050		20		4	—		—		—	12,050		20		4
State and political subdivisions	11,471		255		11	27		—		1	11,498		255		12
Corporate bonds	456		4		1	—		—		—	456		4		1
Total temporarily impaired debt securities	$	23,977	$	279	16	$	27	$	—	1	$	24,004	$	279	17


	December 31, 2019
	Less than 12 Months									12 Months or More						Total
	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses		Number of Securities
	(Dollars in thousands)
Available-for-Sale Debt Securities
Mortgage-backed - GSE residential	$	7,959	$	38	2	$	20,396	$	155	4	$	28,355	$	193	6
Collateralized mortgage obligations - GSE residential	48,980		199		7	8,622		90		9	57,602		289		16
State and political subdivisions	21,412		102		11	167		2		2	21,579		104		13
Corporate bonds	530		—		1	—		—		—	530		—		1
Total temporarily impaired debt securities	$	78,881	$	339	21	$	29,185	$	247	15	$	108,066	$	586	36

As of June 30, 2020, the unrealized losses on investments in state and political subdivisions were caused by interest rate changes and adjustments in credit ratings. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The unrealized losses on the Company’s investments in collateralized mortgage-backed securities and other obligations were caused by interest rate changes and market assumptions about prepayment speeds.

As of December 31, 2019, the unrealized losses on the Company’s investments in state and political subdivisions were caused by interest rate changes and adjustments in credit ratings. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The unrealized losses on the Company’s investments in

collateralized mortgage-backed securities and obligations were caused by interest rate changes and market assumptions about prepayment speeds.

The Company expects to recover the amortized cost basis over the term of the securities. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be OTTI at June 30, 2020.

Gains and losses on the sale of debt securities are recorded on the trade date and are determined using the specific identification method. Gross gains of $761 thousand and $453 thousand and gross losses of $47 thousand and $20 thousand resulting from sales of available-for-sale securities were realized for the six months ended June 30, 2020 and 2019, respectively. The gross gains as of June 30, 2020, included $75 thousand related to a previously disclosed OTTI municipal security that was settled in 2020.

Equity Securities

Equity securities consist of Community Reinvestment Act mutual funds. The fair value of the equity securities was $2 million at both June 30, 2020 and December 31, 2019. The following is a summary of the recorded fair value and the unrealized and realized gains and losses recognized in net income on available-for-sale equity securities:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020		2019		2020		2019
	(Dollars in thousands)
Net gains recognized during the reporting period on equity securities	$	18	$	30	$	53	$	56
Less: net gains recognized during the reporting period on equity securities sold during the reporting period	—		—		—		—
Unrealized gain recognized during the reporting period on equity securities still held at the reporting date	$	18	$	30	$	53	$	56