Securities

9 Months Ended

Sep. 30, 2020

Investments debt and equity securities [Abstract]

Investments In Debt And Marketable Equity Securities And Certain Trading Assets Disclosure Text Block

NOTE 3: SECURITIES

At September 30, 2020 and December 31, 2019, respectively, all securities within the scope of ASC 320, Investments – Debt and Equity Securities, were classified as available-for-sale. The fair value and amortized cost for securities available-for-sale by contractual maturity at September 30, 2020 and December 31, 2019, respectively, are presented below.

			1 year	1 to 5	5 to 10	After 10	Fair	Gross Unrealized		Amortized
(Dollars in thousands)			or less	years	years	years	Value	Gains	Losses	Cost
September 30, 2020
Agency obligations (a)		$	5,011	29,994	55,660	5,389	96,054	3,396	19	$	92,677
Agency RMBS (a)			—	1,302	8,292	145,053	154,647	3,415	285		151,517
State and political subdivisions			96	1,168	6,712	62,245	70,221	3,345	13		66,889
	Total available-for-sale	$	5,107	32,464	70,664	212,687	320,922	10,156	317	$	311,083

December 31, 2019
Agency obligations (a)		$	4,993	27,245	18,470	—	50,708	215	98	$	50,591
Agency RMBS (a)			—	560	4,510	118,207	123,277	798	261		122,740
State and political subdivisions			—	1,355	6,166	54,396	61,917	2,104	9		59,822
	Total available-for-sale	$	4,993	29,160	29,146	172,603	235,902	3,117	368	$	233,153
(a) Includes securities issued by U.S. government agencies or government-sponsored entities.

Securities with aggregate fair values of $162.4 million and $147.8 million at September 30, 2020 and December 31, 2019, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase, Federal Home Loan Bank (“FHLB”) advances, and for other purposes required or permitted by law.

Included in other assets on the accompanying consolidated balance sheets are non-marketable equity investments. The carrying amounts of non-marketable equity investments were $1.4 million at September 30, 2020 and December 31, 2019, respectively. Non-marketable equity investments include FHLB of Atlanta Stock, Federal Reserve Bank (“FRB”) stock, and stock in a privately held financial institution.

Gross Unrealized Losses and Fair Value

The fair values and gross unrealized losses on securities at September 30, 2020 and December 31, 2019, respectively, segregated by those securities that have been in an unrealized loss position for less than 12 months and 12 months or longer, are presented below.

			Less than 12 Months		12 Months or Longer			Total
			Fair	Unrealized	Fair	Unrealized		Fair	Unrealized
(Dollars in thousands)			Value	Losses	Value	Losses		Value	Losses
September 30, 2020:
Agency obligations		$	5,013	19	—	—	$	5,013	19
Agency RMBS			30,819	285	—	—		30,819	285
State and political subdivisions			2,868	13	—	—		2,868	13
	Total	$	38,700	317	—	—	$	38,700	317

December 31, 2019:
Agency obligations		$	24,734	97	4,993	1	$	29,727	98
Agency RMBS			40,126	98	21,477	163		61,603	261
State and political subdivisions			2,741	9	—	—		2,741	9
	Total	$	67,601	204	26,470	164	$	94,071	368

For the securities in the previous table, the Company does not have the intent to sell and has determined it is not more likely than not that the Company will be required to sell the securities before recovery of the amortized cost basis, which may be maturity. On a quarterly basis, the Company assesses each security for credit impairment. For debt securities, the Company evaluates, where necessary, whether credit impairment exists by comparing the present value of the expected cash flows to the securities’ amortized cost basis.

In determining whether a loss is temporary, the Company considers all relevant information including:

 the length of time and the extent to which the fair value has been less than the amortized cost basis;

 adverse conditions specifically related to the security, an industry, or a geographic area (for example, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, in the financial condition of the underlying loan obligors, including changes in technology or the discontinuance of a segment of the business that may affect the future earnings potential of the issuer or underlying loan obligors of the security or changes in the quality of the credit enhancement);

 the historical and implied volatility of the fair value of the security;

 the payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future;

 failure of the issuer of the security to make scheduled interest or principal payments;

 any changes to the rating of the security by a rating agency; and

 recoveries or additional declines in fair value subsequent to the balance sheet date.

Agency obligations

The unrealized losses associated with agency obligations were primarily driven by declines in interest rates and not due to the credit quality of the securities. These securities were issued by U.S. government agencies or government-sponsored entities and did not have any credit losses given the explicit government guarantee or other government support.

Agency RMBS

The unrealized losses associated with agency residential mortgage-backed securities (“RMBS”) were primarily driven by declines in interest rates and not due to the credit quality of the securities. These securities were issued by U.S. government agencies or government-sponsored entities and did not have any credit losses given the explicit government guarantee or other government support.

Securities of U.S. states and political subdivisions

The unrealized losses associated with securities of U.S. states and political subdivisions were primarily driven by declines in interest rates and were not due to the credit quality of the securities. Some of these securities are guaranteed by a bond insurer, but management did not rely on the guarantee in making its investment decision. These securities will continue to be monitored as part of the Company’s quarterly impairment analysis, but are expected to perform even if the rating agencies reduce the credit rating of the bond insurers. As a result, the Company expects to recover the entire amortized cost basis of these securities.

The carrying values of the Company’s investment securities could decline in the future if the financial condition of an issuer deteriorates and the Company determines it is probable that it will not recover the entire amortized cost basis for the security. As a result, there is a risk that other-than-temporary impairment charges may occur in the future.

Other-Than-Temporarily Impaired Securities

Credit-impaired debt securities are debt securities where the Company has written down the amortized cost basis of a security for other-than-temporary impairment and the credit component of the loss is recognized in earnings. At September 30, 2020 and December 31, 2019, the Company had no credit-impaired debt securities and there were no additions or reductions in the credit loss component of credit-impaired debt securities during the nine months ended September 30, 2020 and 2019, respectively.

Realized Gains and Losses
The following table presents the gross realized gains and losses on sales of securities.
			Quarter ended September 30,			Nine months ended September 30,
(Dollars in thousands)			2020	2019		2020	2019
Gross realized gains		$	78	44	$	184	76
Gross realized losses			(62)	—		(81)	(19)
	Realized gains, net	$	16	44	$	103	57