Equity Securities

12 Months Ended

Dec. 31, 2019

Investments, Debt and Equity Securities [Abstract]

Debt Securities Available-for-Sale

The following is a comparative summary of mortgage-backed securities and other debt securities available-for-sale at December 31, 2019 and 2018 (in thousands):



	2019
			Gross		Gross		Estimated
	Amortized		unrealized		unrealized		fair
	cost		gains		losses		value
Mortgage-backed securities:
Pass-through certificates:
Government sponsored enterprises (GSE)	$	324,080	$	6,081	$	754	$	329,407
Real estate mortgage investment conduits (REMICs):
GSE	643,816		2,076		2,225		643,667
Non-GSE	53		—		—		53
	967,949		8,157		2,979		973,127
Other debt securities:
Municipal bonds	296		3		—		299
Corporate bonds	163,725		1,214		13		164,926
	164,021		1,217		13		165,225
Total debt securities available-for-sale	$	1,131,970	$	9,374	$	2,992	$	1,138,352



	2018
			Gross		Gross		Estimated
	Amortized		unrealized		unrealized		fair
	cost		gains		losses		value
Mortgage-backed securities:
Pass-through certificates:
GSE	$	317,530	$	800	$	3,542	$	314,788
REMICs:
GSE	258,050		92		7,979		250,163
Non-GSE	59		—		1		58
	575,639		892		11,522		565,009
Other debt securities:
Municipal bonds	270		3		—		273
Corporate bonds	244,892		72		2,215		242,749
	245,162		75		2,215		243,022
Total debt securities available-for-sale	$	820,801	$	967	$	13,737	$	808,031

The following is a summary of the expected maturity distribution of debt securities available-for-sale other than mortgage-backed securities at December 31, 2019 (in thousands):



Available-for-sale	Amortized cost		Estimated fair value
Due in one year or less	$	75,115	$	75,353
Due after one year through five years	88,906		89,872
	$	164,021	$	165,225

Contractual maturities for mortgage-backed securities are not included above, as expected maturities on mortgage-backed securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties.

Certain securities available-for-sale are pledged or encumbered to secure borrowings under Pledge Agreements and Repurchase Agreements and for other purposes required by law. At December 31, 2019, and December 31, 2018, debt securities

available-for-sale with a carrying value of $730.9 million and $492.4 million, respectively, were pledged to secure repurchase agreements and deposits. See Note 8 - "Borrowings" for further discussion regarding securities pledged or encumbered for borrowings.

For the year ended December 31, 2019, the Company had gross proceeds of $79.3 million on sales of securities available-for-sale with gross realized gains of $514,000 and no gross realized losses. For the year ended December 31, 2018, the Company had gross proceeds of $32.1 million on sales of securities available-for-sale with gross realized gains of $183,000 and gross realized losses of $5,000. For the year ended December 31, 2017, the Company had gross proceeds of $5.0 million on sales of securities available-for-sale with gross realized gains of $173,000 and gross realized losses of $4,000. The Company recognized net gains of $2.0 million on its trading securities portfolio during the year ended December 31, 2019, net losses of $879,000 during the year ended 2018, and net gains of $1.1 million during the year ended 2017. The Company routinely sells securities when market pricing presents, in management’s assessment, an economic benefit that outweighs holding such security, and when smaller balance securities become cost prohibitive to carry.

Gross unrealized losses on mortgage-backed securities and other debt securities available-for-sale, and the estimated fair value of the related securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2019 and 2018, were as follows (in thousands):



	December 31, 2019
	Less than 12 months				12 months or more				Total
	Unrealized		Estimated		Unrealized		Estimated		Unrealized		Estimated
	losses		fair value		losses		fair value		losses		fair value
Mortgage-backed securities:
Pass-through certificates:
GSE	$	25	$	3,404	$	729	$	55,184	$	754	$	58,588
REMICs:
GSE	950		197,634		1,275		54,555		2,225		252,189
Non-GSE	—		—		—		53		—		53
Other debt securities:
Corporate bonds	—		—		13		15,586		13		15,586
Total	$	975	$	201,038	$	2,017	$	125,378	$	2,992	$	326,416



	December 31, 2018
	Less than 12 months				12 months or more				Total
	Unrealized		Estimated		Unrealized		Estimated		Unrealized		Estimated
	losses		fair value		losses		fair value		losses		fair value
Mortgage-backed securities:
Pass-through certificates:
GSE	$	404	$	82,781	$	3,138	$	100,109	$	3,542	$	182,890
REMICs:
GSE	269		46,921		7,710		181,512		7,979		228,433
Non-GSE	—		—		1		58		1		58
Other debt securities:
Corporate bonds	1,703		173,219		512		25,675		2,215		198,894
Total	$	2,376	$	302,921	$	11,361	$	307,354	$	13,737	$	610,275

The Company held 28 pass-through mortgage-backed securities issued or guaranteed by GSEs, 20 REMIC mortgage-backed securities issued or guaranteed by GSEs, one REMIC mortgage-backed security not issued or guaranteed by GSEs, and four corporate bonds that were in a continuous unrealized loss position of greater than twelve months at December 31, 2019. There were three pass-through mortgage-backed securities issued or guaranteed by GSEs, and 23 REMIC mortgage-backed securities issued or guaranteed by GSEs. All securities referred to above, other than the one REMIC mortgage-backed security not issued or guaranteed by a GSE, were rated investment grade at December 31, 2019. The declines in fair value relate to the general interest rate environment and are considered temporary. The securities cannot be prepaid in a manner that would result in the Company not receiving all of its amortized cost. The Company neither has an intent to sell, nor is it more likely than not

that the Company will be required to sell, the securities before the recovery of their amortized cost basis or, if necessary, maturity.

The fair values of our debt securities available-for-sale could decline in the future if the underlying performance of the collateral for the collateralized mortgage obligations or other securities deteriorates and our credit enhancement levels do not provide sufficient protections to our contractual principal and interest, which may result in other-than-temporary impairment in the future. The Company did not recognize any other-than-temporary impairment charges in earnings on debt securities available-for sale during the years ended December 31, 2019, 2018 and 2017.

Equity Securities

At December 31, 2019 and December 31, 2018, equity securities totaled $3.3 million and $1.3 million, respectively. Equity securities consist of money market mutual funds, recorded at fair value of $250,000 and $237,000, at December 31, 2019 and December 31, 2018, respectively, and an investment in a private Small Business Administration (“SBA”) Loan Fund recorded at net asset value of $3.1 million and $1.0 million at December 31, 2019 and December 31, 2018, respectively. As the SBA Loan Fund operates as a private fund, its shares are not publicly traded and therefore have no readily determinable market value. The investment in the fund is recorded at net asset value as a practical expedient for reporting fair value.