Securities

3 Months Ended

Mar. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Marketable Securities [Table Text Block]

SECURITIES

Trading Securities

The Company had trading securities of $3.3 million and $2.8 million as of March 31, 2021 and December 31, 2020, 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 $22.4 million and $22.1 million as of March 31, 2021 and December 31, 2020, 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:

	Three Months Ended
	March 31
	2021		2020
	Dollars in thousands
Net gains (losses) recognized during the period on equity securities	$	316	$	(1,801)
Less: net gains recognized during the period on equity securities sold during the period	29		6
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	287	$	(1,807)

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) as of the dates indicated:

	March 31, 2021										December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for credit losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for credit losses		Fair Value
	(Dollars in thousands)
U.S. government agency securities	$	169,091	$	1,209	$	(2,244)	$	—	$	168,056	$	22,476	$	1,640	$	—	$	—	$	24,116
Agency mortgage-backed securities	286,512		7,561		(3,898)		—		290,175		224,293		9,337		(1)		—		233,629
Agency collateralized mortgage obligations	78,952		2,688		(11)		—		81,629		88,687		3,083		(87)		—		91,683
State, county, and municipal securities	540		15		—		—		555		790		17		—		—		807
Single issuer trust preferred securities issued by banks	489		—		(1)		—		488		489		—		(1)		—		488
Pooled trust preferred securities issued by banks and insurers	1,412		—		(348)		—		1,064		1,429		—		(373)		—		1,056
Small business administration pooled securities	56,171		2,075		—		—		58,246		57,289		3,792		—		—		61,081
Total available for sale securities	$	593,167	$	13,548	$	(6,502)	$	—	$	600,213	$	395,453	$	17,869	$	(462)	$	—	$	412,860

The Company did not record a provision for estimated credit losses on any available for sale securities during the three months ended March 31, 2021 and 2020. Excluded from the table above is accrued interest on available for sale securities of $2.0 million and $1.2 million as of March 31, 2021 and December 31, 2020, 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 during the three months ended March 31, 2021 and 2020. Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status as of March 31, 2021 and December 31, 2020.

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 during the three months ended March 31, 2021 and 2020, and therefore no gains or losses were realized during the periods presented.

The following tables show the gross unrealized losses and fair value of the Company’s available for sale securities in an unrealized loss position, and for which the Company has not recorded a provision for credit losses. 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:

	March 31, 2021
		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)
U.S. government agency securities	4	$	113,171	$	(2,244)	$	—	$	—	$	113,171	$	(2,244)
Agency mortgage-backed securities	8	98,873		(3,898)		—		—		98,873		(3,898)
Agency collateralized mortgage obligations	1	9,519		(11)		—		—		9,519		(11)
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	—		—		1,064		(348)		1,064		(348)
Total impaired available for sale securities	15	$	221,563	$	(6,153)	$	1,552	$	(349)	$	223,115	$	(6,502)
	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. In addition, 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 three months ended March 31, 2021 and 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 March 31, 2021:

•U.S. Government Agency Securities, 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 issuer, including regulatory capital ratios of the issuer.

•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) as of the dates indicated:

	March 31, 2021										December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for credit losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for credit losses		Fair Value
	(Dollars in thousands)
U.S. Treasury securities	$	4,014	$	43	$	—	$	—	$	4,057	$	4,017	$	60	$	—	$	—	$	4,077
Agency mortgage-backed securities	417,811		13,069		(4,252)		—		426,628		356,085		18,036		—		—		374,121
Agency collateralized mortgage obligations	355,686		7,474		(2,158)		—		361,002		335,993		8,466		(340)		—		344,119
Single issuer trust preferred securities issued by banks	1,500		8		—		—		1,508		1,500		—		(2)		—		1,498
Small business administration pooled securities	26,518		717		—		—		27,235		26,917		1,445		—		—		28,362
Total held to maturity securities	$	805,529	$	21,311	$	(6,410)	$	—	$	820,430	$	724,512	$	28,007	$	(342)	$	—	$	752,177

The Company did not record a provision for estimated credit losses on any held to maturity securities during the three months ended March 31, 2021 and 2020. Excluded from the table above is accrued interest on held to maturity securities of $1.6 million and $1.5 million as of March 31, 2021 and December 31, 2020, 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 held to maturity securities during the three months ended March 31, 2021 and 2020. Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status as of March 31, 2021 and December 31, 2020.

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 during the three months ended March 31, 2021 and 2020, and therefore no gains or losses were realized during the periods presented.

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. As of March 31, 2021, all held to maturity securities held by the Company were rated investment grade or higher.

The actual maturities of certain available for sale or held to maturity 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 available for sale and held to maturity securities as of March 31, 2021 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	$	10,180	$	—	$	—	$	159,090	$	157,876	$	—	$	—	$	169,091	$	168,056
Agency mortgage-backed securities	—		—		80,169		82,809		98,747		96,914		107,596		110,452		286,512		290,175
Agency collateralized mortgage obligations	—		—		—		—		—		—		78,952		81,629		78,952		81,629
State, county, and municipal securities	350		351		—		—		190		204		—		—		540		555
Single issuer trust preferred securities issued by banks	—		—		—		—		—		—		489		488		489		488
Pooled trust preferred securities issued by banks and insurers	—		—		—		—		—		—		1,412		1,064		1,412		1,064
Small business administration pooled securities	—		—		—		—		—		—		56,171		58,246		56,171		58,246
Total available for sale securities	$	10,351	$	10,531	$	80,169	$	82,809	$	258,027	$	254,994	$	244,620	$	251,879	$	593,167	$	600,213
Held to maturity securities
U.S. Treasury securities	$	4,014	$	4,057	$	—	$	—	$	—	$	—	$	—	$	—	$	4,014	$	4,057
Agency mortgage-backed securities	—		—		4,614		4,869		128,958		127,901		284,239		293,858		417,811		426,628
Agency collateralized mortgage obligations	—		—		—		—		—		—		355,686		361,002		355,686		361,002
Single issuer trust preferred securities issued by banks	—		—		—		—		1,500		1,508		—		—		1,500		1,508
Small business administration pooled securities	—		—		—		—		—		—		26,518		27,235		26,518		27,235
Total held to maturity securities	$	4,014	$	4,057	$	4,614	$	4,869	$	130,458	$	129,409	$	666,443	$	682,095	$	805,529	$	820,430
Total	$	14,365	$	14,588	$	84,783	$	87,678	$	388,485	$	384,403	$	911,063	$	933,974	$	1,398,696	$	1,420,643

Included in the table above are $3.3 million of callable securities at March 31, 2021.

The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $420.2 million and $419.6 million at March 31, 2021 and December 31, 2020, respectively.

At March 31, 2021 and December 31, 2020, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of consolidated stockholders’ equity.