XML 27 R13.htm IDEA: XBRL DOCUMENT v3.20.4
Investment Securities
 12 Months Ended
Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
INVESTMENT SECURITIES

The amortized cost, gross unrealized gains, gross unrealized losses and approximate fair value of the Corporation's investment securities at the dates indicated were:
 Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Available for sale at December 31, 2020 
U.S. Government-sponsored agency securities$2,380 $50 $— $2,430 
State and municipal1,168,711 89,420 246 1,257,885 
U.S. Government-sponsored mortgage-backed securities632,267 22,505 103 654,669 
Corporate obligations4,031 104 — 4,135 
Total available for sale1,807,389 112,079 349 1,919,119 
Held to maturity at December 31, 2020 
U.S. Government-sponsored agency securities31,087 10 113 30,984 
State and municipal619,927 34,978 32 654,873 
U.S. Government-sponsored mortgage-backed securities575,154 17,889 107 592,936 
Foreign investment1,500 — — 1,500 
Total held to maturity1,227,668 52,877 252 1,280,293 
Total Investment Securities$3,035,057 $164,956 $601 $3,199,412 


Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Available for sale at December 31, 2019 
U.S. Government-sponsored agency securities$38,529 $346 $— $38,875 
State and municipal859,511 41,092 807 899,796 
U.S. Government-sponsored mortgage-backed securities842,349 10,378 1,404 851,323 
Corporate obligations31 — — 31 
Total available for sale1,740,420 51,816 2,211 1,790,025 
Held to maturity at December 31, 2019 
U.S. Government-sponsored agency securities15,619 1 37 15,583 
State and municipal354,115 15,151 107 369,159 
U.S. Government-sponsored mortgage-backed securities434,804 6,921 401 441,324 
Foreign investment1,500 — — 1,500 
Total held to maturity806,038 22,073 545 827,566 
Total Investment Securities2,546,458 73,889 2,756 2,617,591 

The change in unrealized gains/losses from December 31, 2019 to December 31, 2020 is primarily due to the changes in interest rates. The
longer term points on the yield curve have declined since year-end which increases the fair value of securities held in the portfolio.
The following table shows the Corporation’s gross unrealized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position at December 31, 2020 and December 31, 2019

 Less than 12 Months12 Months or LongerTotal
 Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
Temporarily Impaired Available for Sale Securities at December 31, 2020      
State and municipal$5,368 $246 $— $— $5,368 $246 
U.S. Government-sponsored mortgage-backed securities9,651 103 — — 9,651 103 
Total Temporarily Impaired Available for Sale Securities15,019 349 — — 15,019 349 
Temporarily Impaired Held to Maturity Securities at December 31, 2020      
U.S. Government-sponsored agency securities20,881 113 — — 20,881 113 
State and municipal3,477 32 — — 3,477 32 
U.S. Government-sponsored mortgage-backed securities41,504 107 — — 41,504 107 
Total Temporarily Impaired Held to Maturity Securities65,862 252 — — $65,862 252 
Total Temporarily Impaired Investment Securities$80,881 $601 $— $— $80,881 $601 
 Less than 12 Months12 Months or LongerTotal
 Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
Temporarily Impaired Available for Sale Securities at December 31, 2019      
State and municipal$76,273 $807 $— $— $76,273 $807 
U.S. Government-sponsored mortgage-backed securities127,673 1,326 20,796 78 148,469 1,404 
Total Temporarily Impaired Available for Sale Securities203,946 2,133 20,796 78 224,742 2,211 
Temporarily Impaired Held to Maturity Securities at December 31, 2019      
U.S. Government-sponsored agency securities3,016 4 12,467 33 15,483 37 
State and municipal22,947 107 — — 22,947 107 
U.S. Government-sponsored mortgage-backed securities124,253 364 7,991 37 132,244 401 
Total Temporarily Impaired Held to Maturity Securities150,216 475 20,458 70 170,674 545 
Total Temporarily Impaired Investment Securities$354,162 $2,608 $41,254 $148 $395,416 $2,756 


Certain investments in debt securities are reported in the financial statements at amounts less than their historical cost.  The historical cost of these investments totaled $81,482,000 and $398,172,000 at December 31, 2020 and 2019, respectively.  Total fair value of these investments was $80,881,000  and $395,416,000, which was approximately 2.6 and 15.2 percent of the Corporation's available for sale and held to maturity investment portfolio at December 31, 2020 and 2019, respectively.

The Corporation's management believes the decline in fair value for these securities was temporary. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income during the period the OTTI is identified. The Corporation’s management has evaluated all securities with unrealized losses for OTTI and concluded no OTTI existed at December 31, 2020. 

In determining the fair value of the investment securities portfolio, the Corporation utilizes a third party for portfolio accounting services, including market value input, for those securities classified as Level I and Level II in the fair value hierarchy.  The Corporation has obtained an understanding of what inputs are being used by the vendor in pricing the portfolio and how the vendor classified these securities based upon these inputs.  From these discussions, the Corporation’s management is comfortable that the classifications are proper.  The Corporation has gained trust in the data for two reasons:  (a) independent spot testing of the data is conducted by the Corporation through obtaining market quotes from various brokers on a periodic basis; and (b) actual gains or loss resulting from the sale of certain securities has proven the data to be accurate over time.   Fair value of securities classified as Level 3 in the valuation hierarchy was determined using a discounted cash flow model that incorporated market estimates of interest rates and volatility in markets that have not been active.

U.S. Government-Sponsored Mortgage-Backed Securities
 
The unrealized losses on the Corporation's investment in mortgage-backed securities were a result of interest rate changes. The Corporation expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Corporation does not consider those investments to be other-than-temporarily impaired at December 31, 2020. As noted in the table above, the mortgage-backed securities portfolio contains unrealized losses of $103,000 on five securities and $107,000 on three securities in the available for sale and held to maturity portfolios, respectively. All these securities are issued by a government-sponsored entity.
State and Municipal Securities and U.S. Government-Sponsored Agency Securities
 
The unrealized losses on the Corporation's investments in securities of state and political subdivisions and U.S. Government-Sponsored Agency securities were caused by interest rate increases. 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. Because the Corporation does not intend to sell the investments and it is not more likely than not that the Corporation will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Corporation does not consider those investments to be other-than-temporarily impaired at December 31, 2020. As noted in the previous table, the state and municipal securities portfolio contains unrealized losses of $246,000 on four securities and $32,000 on two securities in the available for sale and held to maturity portfolios, respectively. The U.S. Government-Sponsored Agency securities portfolio contains no unrealized loses in the available for sale portfolio, and $113,000 on two securities in the held to maturity portfolio.

The amortized cost and fair value of securities available for sale and held to maturity by contractual maturity are shown below.  Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 Available for SaleHeld to Maturity
 Amortized CostFair ValueAmortized CostFair Value
Maturity Distribution at December 31, 2020    
Due in one year or less$1,349 $1,353 $9,712 $9,755 
Due after one through five years5,545 5,764 22,241 23,190 
Due after five through ten years70,777 75,223 115,408 121,333 
Due after ten years1,097,451 1,182,110 505,153 533,079 
 1,175,122 1,264,450 652,514 687,357 
U.S. Government-sponsored mortgage-backed securities632,267 654,669 575,154 592,936 
Total Investment Securities$1,807,389 $1,919,119 $1,227,668 $1,280,293 

Available for SaleHeld to Maturity
Amortized CostFair ValueAmortized CostFair Value
Maturity Distribution at December 31, 2019
Due in one year or less$1,134 $1,136 $9,920 $10,105 
Due after one through five years5,031 5,141 45,197 45,654 
Due after five through ten years74,745 76,920 84,153 88,844 
Due after ten years817,161 855,505 231,964 241,639 
898,071 938,702 371,234 386,242 
U.S. Government-sponsored mortgage-backed securities842,349 851,323 434,804 441,324 
Total Investment Securities$1,740,420 $1,790,025 $806,038 $827,566 

 
Securities with a carrying value of approximately $890,025,000, $503,427,000 and $416,155,000  were pledged at December 31, 2020, 2019 and 2018, respectively, to secure certain deposits and securities sold under repurchase agreements, and for other purposes as permitted or required by law. In order to facilitate the funding of PPP loans, the Bank pledged securities to the Discount Window at the Federal Reserve Bank resulting in the increase in pledged securities at December 31, 2020 compared to December 31, 2019.

The book value of securities sold under agreements to repurchase amounted to $167,265,000 at December 31, 2020 and $182,856,000 at
December 31, 2019.

Gross gains and losses on the sales and redemptions of available for sale securities for the years indicated are shown below.
202020192018
Sales and Redemptions of Available for Sale Securities:  
Gross gains$11,895 $4,415 $4,269 
Gross losses— — —