SECURITIES

12 Months Ended

Dec. 31, 2020

Investments, Debt and Equity Securities [Abstract]

Trading Securities

The Company had trading securities of $2.8 million and $2.2 million at December 31, 2020 and 2019, respectively. These securities are held in a rabbi trust and will be used for future payments associated with the Company's non-qualified 401(k) Restoration Plan and Non-qualified Deferred Compensation Plan.

Equity Securities

The Company had equity securities of $22.1 million and $21.3 million at December 31, 2020 and 2019, respectively. These securities consist primarily of mutual funds held in a rabbi trust and will be used for future payments associated with the Company’s supplemental executive retirement plans.

The following table represents a summary of the gains and losses recognized within non-interest income and non-interest expense within the consolidated statements of income that relate to equity securities for the periods indicated:


	Years Ended December 31
	2020		2019		2018
	(Dollars in thousands)
Net gains (losses) recognized during the period on equity securities	$	528	$	1,566	(1,225)
Less: net gains recognized during the period on equity securities sold during the period	14		18		874
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	514	$	1,548	(2,099)

Available for Sale Securities

The following table summarizes the amortized cost, allowance for credit losses, and fair value of available for sale securities and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) at the dates indicated:


	December 31, 2020										December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for credit losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Dollars in thousands)

U.S. government agency securities	$	22,476	$	1,640	$	—	$	—	$	24,116	$	32,473	$	642	$	—	$	33,115
Agency mortgage-backed securities	224,293		9,337		(1)		—		233,629		243,548		3,456		(4)		247,000
Agency collateralized mortgage obligations	88,687		3,083		(87)		—		91,683		87,305		1,225		(19)		88,511

State, county, and municipal securities	790		17		—		—		807		1,377		19		—		1,396
Single issuer trust preferred securities issued by banks	489		—		(1)		—		488		488		5		—		493
Pooled trust preferred securities issued by banks and insurers	1,429		—		(373)		—		1,056		1,488		—		(374)		1,114
Small business administration pooled securities	57,289		3,792		—		—		61,081		54,024		771		—		54,795
Total available for sale securities	$	395,453	$	17,869	$	(462)	$	—	$	412,860	$	420,703	$	6,118	$	(397)	$	426,424

The Company did not record a provision for estimated credit losses on any available for sale securities for the year ended December 31, 2020. Excluded from the table above is accrued interest on available for sale securities of $1.2 million and $1.3 million at December 31, 2020 and 2019, respectively, which is included within other assets on the Consolidated Balance Sheets. Additionally, the Company did not record any write-offs of accrued interest income on available for sale securities for the year ended December 31, 2020. No securities held by the Company were delinquent on contractual payments at December 31, 2020, nor were any securities placed on non-accrual status for the year then ended.

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. The Company had no sales of securities available for sale for the year ended December 31, 2020, and therefore no gains or losses were realized for the periods presented. The Company realized losses of $1.5 million on sales of securities available for sale for the year ended December 31, 2019.

The following table shows the gross unrealized losses and fair value of the Company’s available for sale securities which are in an unrealized loss position, and for which the Company has not recorded a provision for credit losses for the year ended December 31, 2020. These available for sale securities are aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position:


		December 31, 2020
		Less than 12 months				12 months or longer				Total
	# of holdings	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
		(Dollars in thousands)

Agency mortgage-backed securities	3	$	437	$	(1)	$	—	$	—	$	437	$	(1)
Agency collateralized mortgage obligations	2	23,323		(87)		—		—		23,323		(87)

Single issuer trust preferred securities issued by banks and insurers	1	488		(1)		—		—		488		(1)
Pooled trust preferred securities issued by banks and insurers	1	—		—		1,056		(373)		1,056		(373)


Total impaired available for sale securities	7	$	24,248	$	(89)	$	1,056	$	(373)	$	25,304	$	(462)

The Company does not intend to sell these investments and has determined, based upon available evidence, that it is more likely than not that the Company will not be required to sell each security before the recovery of its amortized cost basis and management does not believe that any of the securities are impaired due to reasons of credit quality. As a result, the Company did not recognize a provision for credit losses on these investments for the year ended December 31, 2020. The Company made this determination by reviewing various qualitative and quantitative factors regarding each investment category, such as current market conditions, extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, and current analysts’ evaluations.

As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the table above by category were as follows at December 31, 2020:

•Agency Mortgage-Backed Securities and Agency Collateralized Mortgage Obligations: These portfolios have contractual terms that generally do not permit the issuer to settle the securities at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. Government or one of its agencies.

•Single Issuer Trust Preferred Securities: This portfolio consists of one security, which is investment grade. The unrealized loss on this security is attributable to the illiquid nature of the trust preferred market in the current economic environment. Management evaluates various financial metrics for the issuers, including regulatory capital ratios of the issuers.

•Pooled Trust Preferred Securities: This portfolio consists of one below investment grade security which is performing. The unrealized loss on this security is attributable to the illiquid nature of the trust preferred market in the current economic and regulatory environment. Management evaluates collateral credit and instrument structure, including current and expected deferral and default rates and timing. In addition, discount rates are determined by evaluating comparable spreads observed currently in the market for similar instruments.

Held to Maturity Securities

The following table summarizes the amortized cost, fair value and allowance for credit losses of held to maturity securities and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) at the dates indicated:


	December 31, 2020										December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for credit losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Dollars in thousands)
U.S. government agency securities	$	—	$	—	$	—	$	—	$	—	$	12,874	$	123	$	—	$	12,997
U.S. treasury securities	4,017		60		—		—		4,077		4,032		21		—		4,053
Agency mortgage-backed securities	356,085		18,036		—		—		374,121		397,414		8,445		(57)		405,802
Agency collateralized mortgage obligations	335,993		8,466		(340)		—		344,119		293,662		4,501		(849)		297,314

Single issuer trust preferred securities issued by banks	1,500		—		(2)		—		1,498		1,500		—		(10)		1,490
Small business administration pooled securities	26,917		1,445		—		—		28,362		31,324		338		(55)		31,607

Total held to maturity securities	$	724,512	$	28,007	$	(342)	$	—	$	752,177	$	740,806	$	13,428	$	(971)	$	753,263

The Company did not record a provision for estimated credit losses on any held to maturity securities for the year ended December 31, 2020. Excluded from the table above is accrued interest on held to maturity securities of $1.5 million and $1.9 million at December 31, 2020 and 2019, respectively, which is included within other assets on the Consolidated Balance Sheet. Additionally, the Company did not record any write-offs of accrued interest income on held to maturity securities for the year ended December 31, 2020. No securities held by the Company were delinquent on contractual payments at December 31, 2020, nor were any securities placed on non-accrual status for the year then ended.

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. The Company had no sales of held to maturity securities for the years ended December 31, 2020 and 2019, and therefore no gains or losses were realized for such periods.

The Company monitors the credit quality of held to maturity securities through the use of credit ratings. Credit ratings are monitored by the Company on at least a quarterly basis. At December 31, 2020, all held to maturity securities held by the Company were rated investment grade or higher.

The actual maturities of certain securities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. A schedule of the contractual maturities of securities available for sale and securities held to maturity at December 31, 2020 is presented below:


	Due in one year or less				Due after one year to five years				Due after five to ten years				Due after ten years				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Available for sale securities
U.S. government agency securities	$	—	$	—	$	10,001	$	10,231	$	12,475	$	13,885	$	—	$	—	$	22,476	$	24,116
Agency mortgage-backed securities	—		—		74,048		76,441		29,265		31,458		120,980		125,730		224,293		233,629
Agency collateralized mortgage obligations	—		—		—		—		—		—		88,687		91,683		88,687		91,683

State, county, and municipal securities	600		601		—		—		190		206		—		—		790		807
Single issuer trust preferred securities issued by banks	—		—		—		—		—		—		489		488		489		488
Pooled trust preferred securities issued by banks and insurers	—		—		—		—		—		—		1,429		1,056		1,429		1,056
Small business administration pooled securities	—		—		—		—		—		—		57,289		61,081		57,289		61,081
Total available for sale securities	$	600	$	601	$	84,049	$	86,672	$	41,930	$	45,549	$	268,874	$	280,038	$	395,453	$	412,860
Held to maturity securities

U.S. Treasury securities	1,999		2,023		2,018		2,054		—		—		—		—		4,017		4,077
Agency mortgage-backed securities	—		—		2,472		2,588		75,240		78,169		278,373		293,364		356,085		374,121
Agency collateralized mortgage obligations	—		—		—		—		—		—		335,993		344,119		335,993		344,119

Single issuer trust preferred securities issued by banks	—		—		—		—		1,500		1,498		—		—		1,500		1,498
Small business administration pooled securities	—		—		—		—		—		—		26,917		28,362		26,917		28,362

Total held to maturity securities	1,999		2,023		4,490		4,642		76,740		79,667		641,283		665,845		724,512		752,177
Total	$	2,599	$	2,624	$	88,539	$	91,314	$	118,670	$	125,216	$	910,157	$	945,883	$	1,119,965	$	1,165,037

Included in the table above is $3.6 million of callable securities at December 31, 2020.

The carrying value of securities pledged to secure public funds, trust deposits, repurchase agreements and for other purposes, as required or permitted by law, was $419.6 million and $375.5 million at December 31, 2020 and 2019, respectively.

At December 31, 2020 and 2019, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of stockholders’ equity.

Under previous accounting guidance, the Company reviewed both available for sale and held to maturity securities for other-than-temporary-impairment ("OTTI"). However, in accordance with the newly adopted CECL standard, the Company now utilizes separate impairment models for held to maturity and available for sale securities for purposes of estimating credit losses. The following table shows the gross unrealized losses and fair value of the Company’s investments in an unrealized loss position, which the Company had not deemed to be OTTI, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2019:


		December 31, 2019
		Less than 12 months				12 months or longer				Total
	# of holdings	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
		(Dollars in thousands)

Agency mortgage-backed securities	12	$	34,009	$	(59)	$	243	$	(2)	$	34,252	$	(61)
Agency collateralized mortgage obligations	17	48,476		(215)		37,382		(653)		85,858		(868)

Single issuer trust preferred securities issued by banks and insurers	1	—		—		1,490		(10)		1,490		(10)
Pooled trust preferred securities issued by banks and insurers	1	—		—		1,114		(374)		1,114		(374)
Small business administration pooled securities	1	7,349		(55)		—		—		7,349		(55)
Total temporarily impaired securities	32	$	89,834	$	(329)	$	40,229	$	(1,039)	$	130,063	$	(1,368)

The Company did not intend to sell these investments and therefore determined, based upon available evidence, that it was more likely than not that the Company would not be required to sell each security before the recovery of its amortized cost basis. As a result, the Company did not consider these investments to be OTTI and accordingly, there was no OTTI recorded and no cumulative credit related component of OTTI for the year ended December 31, 2019.