Securities

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure

SECURITIES

Trading Securities

The Company had trading securities of $3.5 million and $2.8 million as of September 30, 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 $22.8 million and $22.1 million as of September 30, 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				Nine Months Ended
	September 30				September 30
	2021		2020		2021		2020
	Dollars in thousands
Net gains (losses) recognized during the period on equity securities	$	(169)	$	308	695		(107)
Less: net gains recognized during the period on equity securities sold during the period	50		—		191		6
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	(219)	$	308	$	504	$	(113)

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:

	September 30, 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)
Available for sale securities
U.S. government agency securities	$	217,613	$	1,511	$	(1,779)	$	—	$	217,345	$	22,476	$	1,640	$	—	$	—	$	24,116
U.S. treasury securities	774,492		—		(4,490)		—		770,002		—		—		—		—		—
Agency mortgage-backed securities	294,387		6,120		(3,288)		—		297,219		224,293		9,337		(1)		—		233,629
Agency collateralized mortgage obligations	85,076		1,933		(522)		—		86,487		88,687		3,083		(87)		—		91,683
State, county, and municipal securities	276		12		—		—		288		790		17		—		—		807
Single issuer trust preferred securities issued by banks	489		2		—		—		491		489		—		(1)		—		488
Pooled trust preferred securities issued by banks and insurers	1,341		—		(331)		—		1,010		1,429		—		(373)		—		1,056
Small business administration pooled securities	51,718		2,650		—		—		54,368		57,289		3,792		—		—		61,081
Total available for sale securities	$	1,425,392	$	12,228	$	(10,410)	$	—	$	1,427,210	$	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 and nine months ended September 30, 2021 and 2020. Excluded from the table above is accrued interest on available for sale securities of $3.3 million and $1.2 million as of September 30, 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 and nine months ended September 30, 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 September 30, 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 or nine months ended September 30, 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, as of the dated indicated. 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:

	September 30, 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	5	$	138,262	$	(1,779)	$	—	$	—	$	138,262	$	(1,779)
U.S. treasury securities	16	770,002		(4,490)		—		—		770,002		(4,490)
Agency mortgage-backed securities	9	131,548		(3,287)		304		(1)		131,852		(3,288)
Agency collateralized mortgage obligations	1	22,994		(522)		—		—		22,994		(522)
Pooled trust preferred securities issued by banks and insurers	1	—		—		1,010		(331)		1,010		(331)
Total impaired available for sale securities	32	$	1,062,806	$	(10,078)	$	1,314	$	(332)	$	1,064,120	$	(10,410)
	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 during the three and nine months ended September 30, 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 September 30, 2021:

•U.S. Government Agency Securities, U.S. Treasury 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.

•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:

	September 30, 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	$	33,422	$	—	$	(127)	$	—	$	33,295	$	—	$	—	$	—	$	—	$	—
U.S. treasury securities	3,007		17		—		—		3,024		4,017		60		—		—		4,077
Agency mortgage-backed securities	352,483		10,911		(2,781)		—		360,613		356,085		18,036		—		—		374,121
Agency collateralized mortgage obligations	451,151		5,089		(4,202)		—		452,038		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	23,686		1,142		—		—		24,828		26,917		1,445		—		—		28,362
Total held to maturity securities	$	865,249	$	17,167	$	(7,110)	$	—	$	875,306	$	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 and nine months ended September 30, 2021 and 2020. Excluded from the table above is accrued interest on held to maturity securities of $2.2 million and $1.5 million as of September 30, 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 and nine months ended September 30, 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 September 30, 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 and nine months ended September 30, 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 September 30, 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 September 30, 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	$	10,000	$	10,066	$	31,422	$	31,275	$	176,191	$	176,004	$	—	$	—	$	217,613	$	217,345
U.S. treasury securities	—		—		541,282		538,755		233,210		231,247		—		—		774,492		770,002
Agency mortgage-backed securities	2,273		2,292		81,194		83,434		88,655		87,152		122,265		124,341		294,387		297,219
Agency collateralized mortgage obligations	—		—		—		—		—		—		85,076		86,487		85,076		86,487
State, county, and municipal securities	85		85		—		—		191		203		—		—		276		288
Single issuer trust preferred securities issued by banks	—		—		—		—		—		—		489		491		489		491
Pooled trust preferred securities issued by banks and insurers	—		—		—		—		—		—		1,341		1,010		1,341		1,010
Small business administration pooled securities	—		—		—		—		—		—		51,718		54,368		51,718		54,368
Total available for sale securities	$	12,358	$	12,443	$	653,898	$	653,464	$	498,247	$	494,606	$	260,889	$	266,697	$	1,425,392	$	1,427,210
Held to maturity securities
U.S. government agency securities	$	—	$	—	$	33,422	$	33,295	$	—	$	—	$	—	$	—	$	33,422	$	33,295
U.S. treasury securities	3,007		3,024		—		—		—		—		—		—		3,007		3,024
Agency mortgage-backed securities	—		—		3,482		3,677		125,204		125,407		223,797		231,529		352,483		360,613
Agency collateralized mortgage obligations	—		—		—		—		—		—		451,151		452,038		451,151		452,038
Single issuer trust preferred securities issued by banks	—		—		—		—		1,500		1,508		—		—		1,500		1,508
Small business administration pooled securities	—		—		—		—		—		—		23,686		24,828		23,686		24,828
Total held to maturity securities	$	3,007	$	3,024	$	36,904	$	36,972	$	126,704	$	126,915	$	698,634	$	708,395	$	865,249	$	875,306
Total	$	15,365	$	15,467	$	690,802	$	690,436	$	624,951	$	621,521	$	959,523	$	975,092	$	2,290,641	$	2,302,516

Included in the table above are $3.2 million of callable securities at September 30, 2021.

The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $678.4 million and $419.6 million at September 30, 2021 and December 31, 2020, respectively.

At September 30, 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.