INVESTMENT SECURITIES

3 Months Ended

Mar. 31, 2020

INVESTMENT SECURITIES

INVESTMENT SECURITIES

Note 4 – Investment Securities

Investment Securities Available for Sale

Investment securities as of March 31, 2020 and December 31, 2019 were as follows:

	March 31, 2020
							Allowance
			Gross		Gross		for credit
	Amortized		unrealized		unrealized		losses on		Fair
(dollars in thousands)	cost		gains		losses		investments		value
Investment securities available for sale
U.S. government sponsored entities and U.S. agency securities	$	46,428	$	929	$	—	$	—	$	47,357
Mortgage-backed securities - agency		317,332		9,417		49		—		326,700
Mortgage-backed securities - non-agency		28,121		—		840		—		27,281
State and municipal securities		112,500		3,897		284		19		116,094
Corporate securities		140,287		1,168		2,577		56		138,822
Total available for sale securities	$	644,668	$	15,411	$	3,750	$	75	$	656,254

	December 31, 2019
							Allowance
			Gross		Gross		for credit
	Amortized		unrealized		unrealized		losses on		Fair
(dollars in thousands)	cost		gains		losses		investments		value
Investment securities available for sale
U.S. government sponsored entities and U.S. agency securities	$	59,600	$	442	$	22		N/A	$	60,020
Mortgage-backed securities - agency		321,840		3,368		234		N/A		324,974
Mortgage-backed securities - non-agency		17,198		3		53		N/A		17,148
State and municipal securities		119,371		5,195		11		N/A		124,555
Corporate securities		121,159		2,131		554		N/A		122,736
Total available for sale securities	$	639,168	$	11,139	$	874		N/A	$	649,433

Unrealized losses and fair values for investment securities available for sale as of March 31, 2020, for which an ACL has not been recorded, and December 31, 2019, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are summarized as follows:

	March 31, 2020
	Less than 12 Months				12 Months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	value		loss		value		loss		value		loss
Investment securities available for sale
Mortgage-backed securities - agency	$	10,175	$	42	$	1,255	$	7	$	11,430	$	49
Mortgage-backed securities - non-agency		25,849		840		—		—		25,849		840
Corporate securities		41,499		1,287		—		—		41,499		1,287
Total available for sale securities	$	77,523	$	2,169	$	1,255	$	7	$	78,778	$	2,176

	December 31, 2019
	Less than 12 Months				12 Months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	value		loss		value		loss		value		loss
Investment securities available for sale
U.S. government sponsored entities and U.S. agency securities	$	7,200	$	22	$	—	$	—	$	7,200	$	22
Mortgage-backed securities - agency		75,336		170		7,170		64		82,506		234
Mortgage-backed securities - non-agency		11,059		53		—		—		11,059		53
State and municipal securities		1,813		11		—		—		1,813		11
Corporate securities		20,269		481		3,915		73		24,184		554
Total available for sale securities	$	115,677	$	737	$	11,085	$	137	$	126,762	$	874

For all of the above investment securities, the unrealized losses are generally due to changes in interest rates and other market conditions, and unrealized losses are considered to be temporary as the fair value is expected to recover as the securities approach their respective maturity dates.

At March 31, 2020, 74 investment securities available for sale had unrealized losses with aggregate depreciation of 2.81% from their amortized cost basis. The unrealized losses related principally to the fluctuations in the current rate environment. In analyzing an issuer’s financial condition, we consider whether the securities are issued by the federal government or its agencies and whether downgrades by bond rating agencies have occurred. The Company does not intend to sell and it is likely that the Company will not be required to sell the securities prior to their anticipated recovery.

The table below presents a rollforward by major security type for the three months ended March 31, 2020 of the ACL on investment securities available for sale held at period end:

	State and municipal		Corporate
(dollars in thousands)	securities		securities
Balances, January 1, 2020	$	—	$	—
Impact of adopting ASC 326		—		—
Additions for securities for which no previous expected credit losses were recognized		19		56
Balances, March 31, 2020	$	19	$	56

The following is a summary of the amortized cost and fair value of the investment securities available for sale, by maturity, at March 31, 2020. Expected maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be prepaid without penalties. The maturities of all other investment securities available for sale are based on final contractual maturity.

	Amortized		Fair
(dollars in thousands)	cost		value
Investment securities available for sale
Within one year	$	33,584	$	33,801
After one year through five years		78,025		79,387
After five years through ten years		169,041		169,579
After ten years		18,565		19,506
Mortgage-backed securities		345,453		353,981
Total available for sale securities	$	644,668	$	656,254

There were no sales of investment securities available for sale for the three months ended March 31, 2020 and 2019.

Equity Securities

Equity securities are recorded at fair value and totaled $5.6 million at March 31, 2020 and December 31, 2019. There were no sales of equity securities for the three months ended March 31, 2020 and 2019. During the three months ended March 31, 2020, the Company recognized unrealized losses of $1,000, while unrealized gains of $67,000 were recognized during the three months ended March 31, 2019. Net unrealized gains and losses on equity securities are recorded in other income in the consolidated statements of income.