Securities

9 Months Ended

Sep. 30, 2021

3.	Securities

Securities available for sale consist of the following:

	Amortized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
September 30, 2021
U.S. agency	$	13,278	$	187	$	47	$	13,418
U.S. agency residential mortgage-backed		337,140		2,810		2,090		337,860
U.S. agency commercial mortgage-backed		18,473		161		26		18,608
Private label mortgage-backed		81,154		1,271		114		82,311
Other asset backed		174,488		1,653		20		176,121
Obligations of states and political subdivisions		555,155		9,983		916		564,222
Corporate		149,893		3,736		126		153,503
Trust preferred		1,974		-		148		1,826
Foreign government		499		10		-		509
Total	$	1,332,054	$	19,811	$	3,487	$	1,348,378

December 31, 2020
U.S. agency	$	10,456	$	305	$	13	$	10,748
U.S. agency residential mortgage-backed		340,224		4,951		593		344,582
U.S. agency commercial mortgage-backed		6,869		326		-		7,195
Private label mortgage-backed		41,429		1,539		139		42,829
Other asset backed		252,596		1,796		211		254,181
Obligations of states and political subdivisions		315,780		8,691		178		324,293
Corporate		82,307		3,807		97		86,017
Trust preferred		1,971		-		173		1,798
Foreign government		500		16		-		516
Total	$	1,052,132	$	21,431	$	1,404	$	1,072,159

Our investments’ gross unrealized losses and fair values aggregated by investment type and length of time that individual securities have been at a continuous unrealized loss position follows:

	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
September 30, 2021
U.S. agency	$	5,071	$	44	$	1,382	$	3	$	6,453	$	47
U.S. agency residential mortgage-backed		135,320		1,923		19,297		167		154,617		2,090
U.S. agency commercial mortgage-backed		5,367		26		-		-		5,367		26
Private label mortgage-backed		18,628		88		2,110		26		20,738		114
Other asset backed		8,161		9		989		11		9,150		20
Obligations of states and political subdivisions		88,064		871		567		45		88,631		916
Corporate		27,380		125		90		1		27,470		126
Trust preferred		-		-		1,826		148		1,826		148
Total	$	287,991	$	3,086	$	26,261	$	401	$	314,252	$	3,487

December 31, 2020
U.S. agency	$	1,469	$	3	$	2,329	$	10	$	3,798	$	13
U.S. agency residential mortgage-backed		96,839		592		83		1		96,922		593
Private label mortgage-backed		11,838		95		2,050		44		13,888		139
Other asset backed		7,142		25		21,197		186		28,339		211
Obligations of states and political subdivisions		28,957		177		800		1		29,757		178
Corporate		1,924		97		-		-		1,924		97
Trust preferred		-		-		1,798		173		1,798		173
Total	$	148,169	$	989	$	28,257	$	415	$	176,426	$	1,404

Securities available for sale in unrealized loss positions are evaluated quarterly for impairment related to credit losses. For securities available for sale in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities available for sale that do not meet this criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, adverse conditions specifically related to the security and the issuer and the impact of changes in market interest rates on the market value of the security, among other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an ACL is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income (loss), net of applicable taxes. No ACL for securities available for sale was needed at September 30, 2021. Accrued interest receivable on securities available for sale totaled $5.7 million at September 30, 2021 and is excluded from the estimate of credit losses.

U.S. agency, U.S. agency residential mortgage-backed and U.S. agency commercial mortgage-backed securities — at September 30, 2021, we had 14 U.S. agency, 57 U.S. agency residential mortgage-backed and 13 U.S. agency commercial mortgage-backed securities whose fair value is less than amortized cost. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. The unrealized losses are largely attributed to widening spreads to Treasury bonds and/or an increase in interest rates since acquisition.

Private label mortgage backed, other asset backed and corporate securities — at September 30, 2021, we had 21 private label mortgage backed, 10 other asset backed and 22 corporate securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and/or an increase in interest rates since acquisition.

Obligations of states and political subdivisions — at September 30, 2021, we had 193 municipal securities whose fair value is less than amortized cost. The unrealized losses are primarily due to an increase in interest rates since acquisition.

Trust preferred securities — at September 30, 2021, we had two trust preferred securities whose fair value is less than amortized cost. Both of our trust preferred securities are single issue securities issued by a trust subsidiary of a bank holding company. The pricing of trust preferred securities has suffered from credit spread widening. One of the securities is rated by a major rating agency as investment grade while the other one is non-rated. The non-rated issue is a relatively small bank and was never rated. The issuer of this non-rated trust preferred security, which had a total amortized cost of $1.0 million and total fair value of $0.86 million as of September 30, 2021, continues to have satisfactory credit metrics and make interest payments.

At September 30, 2021 management does not intend to liquidate any of the securities discussed above and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses.

We recorded no credit related charges in our Condensed Consolidated Statements of Operations related to securities available for sale during the nine month periods ended September 30, 2021 and 2020, respectively.

The amortized cost and fair value of securities available for sale at September 30, 2021, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	15,701	$	15,849
Maturing after one year but within five years		125,299		128,338
Maturing after five years but within ten years		230,998		234,100
Maturing after ten years		348,801		355,191
		720,799		733,478
U.S. agency residential mortgage-backed		337,140		337,860
U.S. agency commercial mortgage-backed		18,473		18,608
Private label mortgage-backed		81,154		82,311
Other asset backed		174,488		176,121
Total	$	1,332,054	$	1,348,378

The actual maturity may differ from the contractual maturity because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Gains and losses realized on the sale of securities available for sale are determined using the specific identification method and are recognized on a trade-date basis. A summary of proceeds from the sale of securities available for sale and gains and losses for the nine month periods ending September 30, follows:

			Realized
	Proceeds		Gains		Losses
	(In thousands)
2021	$	81,683	$	1,471	$	50
2020		36,593		253		-