XML 78 R13.htm IDEA: XBRL DOCUMENT v3.20.1
Investment
 3 Months Ended
Mar. 31, 2020
Investment [Abstract]  
Investment

Note 5 – Investments



The following table shows a comparison of amortized cost and fair values of investment securities at March 31, 2020 and December 31, 2019:







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

Amortized
Cost

 

Gross
Unrealized
Gains

 

Gross
Unrealized
Losses

 

Fair
Value

 

OTTI
in AOCL

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

 34,580 

 

$

 688 

 

$

 —

 

$

 35,268 

 

$

 —

Residential mortgage-backed agencies

 

 

 9,945 

 

 

 202 

 

 

 —

 

 

 10,147 

 

 

 —

Commercial mortgage-backed agencies

 

 

 29,210 

 

 

 497 

 

 

 37 

 

 

 29,670 

 

 

 —

Collateralized mortgage obligations

 

 

 28,023 

 

 

 792 

 

 

 —

 

 

 28,815 

 

 

 —

Obligations of states and political subdivisions

 

 

 14,108 

 

 

 404 

 

 

 —

 

 

 14,512 

 

 

 —

Collateralized debt obligations

 

 

 18,470 

 

 

 —

 

 

 6,090 

 

 

 12,380 

 

 

 (4,507)

Total available for sale

 

$

 134,336 

 

$

 2,583 

 

$

 6,127 

 

$

 130,792 

 

$

 (4,507)

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

 16,202 

 

$

 655 

 

$

 —

 

$

 16,857 

 

$

 —

Residential mortgage-backed agencies

 

 

 40,666 

 

 

 1,249 

 

 

 4 

 

 

 41,911 

 

 

 —

Commercial mortgage-backed agencies

 

 

 15,443 

 

 

 799 

 

 

 —

 

 

 16,242 

 

 

 —

Collateralized mortgage obligations

 

 

 2,873 

 

 

 171 

 

 

 —

 

 

 3,044 

 

 

 —

Obligations of states and political subdivisions

 

 

 16,215 

 

 

 4,042 

 

 

 —

 

 

 20,257 

 

 

 —

Total held to maturity

 

$

 91,399 

 

$

 6,916 

 

$

 4 

 

$

 98,311 

 

$

 —

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

 39,987 

 

$

 —

 

$

 93 

 

$

 39,894 

 

$

 —

Residential mortgage-backed agencies

 

 

 4,917 

 

 

 —

 

 

 17 

 

 

 4,900 

 

 

 —

Commercial mortgage-backed agencies

 

 

 27,634 

 

 

 222 

 

 

 92 

 

 

 27,764 

 

 

 —

Collateralized mortgage obligations

 

 

 29,903 

 

 

 129 

 

 

 109 

 

 

 29,923 

 

 

 —

Obligations of states and political subdivisions

 

 

 14,124 

 

 

 346 

 

 

 —

 

 

 14,470 

 

 

 —

Collateralized debt obligations

 

 

 18,443 

 

 

 —

 

 

 4,089 

 

 

 14,354 

 

 

 (2,835)

Total available for sale

 

$

 135,008 

 

$

 697 

 

$

 4,400 

 

$

 131,305 

 

$

 (2,835)

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

 16,164 

 

$

 659 

 

$

 —

 

$

 16,823 

 

$

 —

Residential mortgage-backed agencies

 

 

 42,939 

 

 

 469 

 

 

 155 

 

 

 43,253 

 

 

 —

Commercial mortgage-backed agencies

 

 

 15,521 

 

 

 344 

 

 

 —

 

 

 15,865 

 

 

 —

Collateralized mortgage obligations

 

 

 3,140 

 

 

 3 

 

 

 —

 

 

 3,143 

 

 

 —

Obligations of states and political subdivisions

 

 

 16,215 

 

 

 5,357 

 

 

 —

 

 

 21,572 

 

 

 —

Total held to maturity

 

$

 93,979 

 

$

 6,832 

 

$

 155 

 

$

 100,656 

 

$

 —



Proceeds from sales of available for sale securities and the realized gains and losses were as follows:





 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,

(in thousands)

 

2020

 

2019

Proceeds

 

$

 —

 

$

 260 

Realized losses

 

 

 —

 

 

 6 



The following table shows the Corporation’s investment securities with gross unrealized losses and fair values at March 31, 2020 and December 31, 2019, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

  Less than 12 months

 

 

 

12 months or more

 

 

(in thousands)

 

Fair
Value

 

Unrealized
Losses

 

Number of
Investments

 

Fair
Value

 

Unrealized
Losses

 

Number of
Investments

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial mortgage-backed agencies

 

 

 2,683 

 

 

 29 

 

 1 

 

 

 1,359 

 

 

 8 

 

 1 

Collateralized debt obligations

 

 

 —

 

 

 —

 

 —

 

 

 12,380 

 

 

 6,090 

 

 9 

Total available for sale

 

$

 2,683 

 

$

 29 

 

 1 

 

$

 13,739 

 

$

 6,098 

 

 10 

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage-backed agencies

 

$

 —

 

$

 —

 

 —

 

$

 596 

 

$

 4 

 

 2 

Total held to maturity

 

$

 —

 

$

 —

 

 —

 

$

 596 

 

$

 4 

 

 2 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

 24,907 

 

$

 80 

 

 3 

 

$

 14,987 

 

$

 13 

 

 3 

Residential mortgage-backed agencies

 

 

 4,900 

 

 

 17 

 

 1 

 

 

 —

 

 

 —

 

 —

Commercial mortgage-backed agencies

 

 

 4,623 

 

 

 37 

 

 2 

 

 

 5,793 

 

 

 55 

 

 3 

Collateralized mortgage obligations

 

 

 —

 

 

 —

 

 —

 

 

 35,472 

 

 

 109 

 

 1 

Collateralized debt obligations

 

 

 —

 

 

 —

 

 —

 

 

 14,353 

 

 

 4,089 

 

 9 

Total available for sale

 

$

 34,430 

 

$

 134 

 

 6 

 

$

 70,605 

 

$

 4,266 

 

 16 

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage-backed agencies

 

$

 2,722 

 

$

 6 

 

 3 

 

$

 9,486 

 

$

 149 

 

 12 

Total held to maturity

 

$

 2,722 

 

$

 6 

 

 3 

 

$

 9,486 

 

$

 149 

 

 12 



Management systematically evaluates securities for impairment on a quarterly basis.  Based upon application of accounting guidance for subsequent measurement in ASC Topic 320 (ASC Section 320-10-35), management assesses whether (a) the Corporation has the intent to sell a security being evaluated and (b) it is more likely than not that the Corporation will be required to sell the security prior to the anticipated recovery of any decline in fair value.  If neither applies, then any decline in the fair value below the security’s cost that is considered an other-than-temporary decline is split into two components.  The first component is the loss attributable to declining credit quality.  Credit losses are recognized in earnings as realized losses in the period in which the impairment determination is made.  The second component consists of all other losses, which are recognized in other comprehensive loss.  In estimating other than temporary impairment (“OTTI”) losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) adverse conditions specifically related to the security, an industry, or a geographic area, (3) the historic and implied volatility of the fair value of the security, (4) changes in the rating of the security by a rating agency, (5) recoveries or additional declines in fair value subsequent to the balance sheet date, (6) failure of the issuer of the security to make scheduled interest or principal payments, and (7) the payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future.  Management also monitors cash flow projections for securities that are considered beneficial interests under the guidance of ASC Subtopic 325-40, Investments – Other – Beneficial Interests in Securitized Financial Assets, (ASC Section 325-40-35). 



Management believes that the valuation of certain securities is a critical accounting policy that requires significant estimates in preparation of the Corporation’s consolidated financial statements.  Management utilizes an independent third party to prepare both the impairment valuations and fair value determinations for the Corporation’s collateralized debt obligation (“CDO”) portfolio consisting of pooled trust preferred securities.  See Note 8 for a discussion of the methodology used by management to determine the fair values of these securities.  Based upon a review of credit quality and the cash flow tests performed by the independent third party, management determined that there were no securities that had credit-related non-cash OTTI charges during the first three months of 2020 or 2019. 



The Corporation does not believe that the investment securities that were in an unrealized loss position at March 31, 2020 represent other-than-temporary impairment.  The Corporation does not intend to sell nor is it anticipated that it would be required to sell any of its impaired investment securities at a loss. 



The following tables present a cumulative roll-forward of the amount of non-cash OTTI charges related to credit losses which have been recognized in earnings for the trust preferred securities in the CDO portfolio held and not intended to be sold for the three-month periods ended March 31, 2020 and 2019:





 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,

(in thousands)

 

2020

 

2019

Balance of credit-related OTTI at January 1

 

$

 2,446 

 

$

 2,646 

Reduction for increases in cash flows expected to be collected

 

 

 (50)

 

 

 (49)

Balance of credit-related OTTI at March 31

 

$

 2,396 

 

$

 2,597 



The amortized cost and estimated fair value of securities by contractual maturity at March 31, 2020 are shown in the following table.  Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.





 

 

 

 

 

 



 

 

 

 

 

 



 

March 31, 2020

(in thousands)

 

Amortized
Cost

 

Fair
Value

Contractual Maturity

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

Due after one year through five years

 

$

 4,449 

 

$

 4,528 

Due after five years through ten years

 

 

 34,838 

 

 

 35,530 

Due after ten years

 

 

 27,871 

 

 

 22,102 



 

 

 67,158 

 

 

 62,160 

Residential mortgage-backed agencies

 

$

 9,945 

 

 

 10,147 

Commercial mortgage-backed agencies

 

 

 29,210 

 

 

 29,670 

Collateralized mortgage obligations

 

 

 28,023 

 

 

 28,815 

Total available for sale

 

$

 134,336 

 

$

 130,792 

Held to Maturity:

 

 

 

 

 

 

Due after one year through five years

 

$

 16,202 

 

$

 16,857 

Due after ten years

 

 

 16,215 

 

 

 20,257 



 

 

 32,417 

 

 

 37,114 

Residential mortgage-backed agencies

 

 

 40,666 

 

 

 41,911 

Commercial mortgage-backed agencies

 

 

 15,443 

 

 

 16,242 

Collateralized mortgage obligations

 

 

 2,873 

 

 

 3,044 

Total held to maturity

 

$

 91,399 

 

$

 98,311