SECURITIES AVAILABLE FOR SALE

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

SECURITIES AVAILABLE FOR SALE

NOTE 2.           SECURITIES AVAILABLE FOR SALE

The following is a summary of securities available for sale:

			Gross		Gross
			Unrealized		Unrealized
(in thousands)	Amortized Cost		Gains		Losses		Fair Value
June 30, 2020
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	258,169	$	9,701	$	(426)	$	267,444
US Government agency		94,894		3,845		(84)		98,655
Private label		20,200		41		(874)		19,367
Obligations of states and political subdivisions thereof		153,802		5,514		(29)		159,287
Corporate bonds		98,248		1,141		(2,568)		96,821
Total securities available for sale	$	625,313	$	20,242	$	(3,981)	$	641,574

			Gross		Gross
			Unrealized		Unrealized
(in thousands)	Amortized Cost		Gains		Losses		Fair Value
December 31, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	319,064	$	4,985	$	(2,080)	$	321,969
US Government agency		98,568		1,640		(547)		99,661
Private label		20,212		68		(747)		19,533
Obligations of states and political subdivisions thereof		139,240		3,034		(268)		142,006
Corporate bonds		78,804		1,478		(221)		80,061
Total securities available for sale	$	655,888	$	11,205	$	(3,863)	$	663,230

The amortized cost and estimated fair value of available for sale (“AFS”) securities segregated by contractual maturity at June 30, 2020 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.

	Available for sale
(in thousands)	Amortized Cost		Fair Value
Within 1 year	$	—	$	—
Over 1 year to 5 years		26,069		26,368
Over 5 years to 10 years		70,676		69,548
Over 10 years		155,305		160,192
Total bonds and obligations		252,050		256,108
Mortgage-backed securities		373,263		385,466
Total securities available for sale	$	625,313	$	641,574

The following table presents the gains and losses from the sale of AFS securities for the periods presented:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2020		2019		2020		2019
Gross gains on sales of available for sale securities	$	1,362	$	—	$	1,508	$	—
Gross losses on sales of available for sale securities		(11)		—		(22)		—
Net gains on sale of available for sale securities	$	1,351	$	—	$	1,486	$	—

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
June 30, 2020
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	187	$	39,157	$	239	$	4,047	$	426	$	43,204
US Government agency		57		5,177		27		1,674		84		6,851
Private label		3		112		871		19,133		874		19,245
Obligations of states and political subdivisions thereof		29		11,564		—		—		29		11,564
Corporate bonds		2,332		45,854		236		4,765		2,568		50,619
Total securities available for sale	$	2,608	$	101,864	$	1,373	$	29,619	$	3,981	$	131,483

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
December 31, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	1,074	$	43,429	$	1,006	$	49,712	$	2,080	$	93,141
US Government agency		432		19,717		115		9,120		547		28,837
Private label		380		9,843		367		9,411		747		19,254
Obligations of states and political subdivisions thereof		137		29,355		131		1,682		268		31,037
Corporate bonds		142		9,888		79		12,276		221		22,164
Total securities available for sale	$	2,165	$	112,232	$	1,698	$	82,201	$	3,863	$	194,433

Securities Impairment: As a part of the Company’s ongoing security monitoring process, the Company identifies securities in an unrealized loss position that could potentially be other-than-temporarily impaired. For the three and six months ended June 30, 2020 and 2019 the Company did not record any other-than-temporary impairment (“OTTI”) losses.

The following table presents the changes in estimated credit losses recognized by the Company for the periods presented:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Estimated credit losses as of prior year-end	$	1,697	$	1,697	$	1,697	$	1,697
Reductions for securities paid off during the period		—		—		—		—
Estimated credit losses at end of the period	$	1,697	$	1,697	$	1,697	$	1,697

The Company expects to recover its amortized cost basis on all securities in its AFS portfolio. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of June 30, 2020, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover.

The following summarizes, by investment security type, the basis for the conclusion that securities in an unrealized loss position were not OTTI at June 30, 2020:

US Government-sponsored enterprises

42 out of the total 618 securities in the Company’s portfolios of AFS US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 0.98% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association and Federal Home Loan Mortgage Corporation guarantee the contractual cash flows of all of the Company’s US Government-sponsored enterprises. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

US Government agency

12 out of the total 170 securities in the Company’s portfolios of AFS US Government agency securities were in unrealized loss positions. Aggregate unrealized losses represented 1.21% of the amortized cost of securities in unrealized loss positions. The Government National Mortgage Association guarantees the contractual cash flows of all of the Company’s US Government agency securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

Private label

11 of the total 18 securities in the Company’s portfolio of AFS private label mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 4.34% of the amortized cost of securities in unrealized loss positions. Based upon the expectation that the Company will receive all of the future contractual cash flows related to the amortized cost on these securities, the Company does not consider there to be any additional other-than-temporary impairment with respect to these securities.

Obligations of states and political subdivisions thereof

3 of the total 190 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.25% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for the risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

Corporate bonds

16 out of the total 33 securities in the Company’s portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 4.89% of the amortized cost of bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities. The most recent review includes all bond issuers and their current credit ratings, financial performance and capitalization.