Investment Securities

6 Months Ended

Jun. 30, 2021

Investments, Debt and Equity Securities [Abstract]

The amortized cost and fair value of investment securities available for sale as of June 30, 2021 and December 31, 2020 are as follows:

As of June 30, 2021


(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Treasury securities	$	100	$	—	$	—	$	100
Obligations of the U.S. government and agencies	117,543		660		(1,502)		116,701
Obligations of state and political subdivisions	2,156		12		—		2,168
Mortgage-backed securities	474,153		9,969		(1,537)		482,585
Collateralized mortgage obligations	14,687		458		—		15,145
Collateralized loan obligations	99,515		158		(38)		99,635
Corporate bonds	11,000		754		—		11,754
Other investment securities	650		—		—		650
Total	$	719,804	$	12,011	$	(3,077)	$	728,738

As of December 31, 2020


(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Treasury securities	$	500,095	$	5	$	—	$	500,100
Obligations of the U.S. government and agencies	92,449		868		(219)		93,098
Obligations of state and political subdivisions	2,149		22		—		2,171
Mortgage-backed securities	441,575		12,739		(457)		453,857
Collateralized mortgage obligations	18,680		583		—		19,263
Collateralized loan obligations	94,500		1		(97)		94,404
Corporate bonds	11,000		421		—		11,421
Other investment securities	650		—		—		650
Total	$	1,161,098	$	14,639	$	(773)	$	1,174,964

The following tables present the aggregate amount of gross unrealized losses as of June 30, 2021 and December 31, 2020 on available for sale investment securities classified according to the amount of time those securities have been in a continuous unrealized loss position:

As of June 30, 2021


	Less than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of the U.S. government and agencies	$	70,508	$	(1,502)	$	—	$	—	$	70,508	$	(1,502)

Mortgage-backed securities	196,757		(1,537)		—		—		196,757		(1,537)

Collateralized loan obligations	18,962		(38)		—		—		18,962		(38)

Total	$	286,227	$	(3,077)	$	—	$	—	$	286,227	$	(3,077)

As of December 31, 2020


	Less than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

Obligations of the U.S. government and agencies	$	19,777	$	(219)	$	—	$	—	$	19,777	$	(219)

Mortgage-backed securities	79,990		(457)		—		—		79,990		(457)

Collateralized loan obligations	31,903		(97)		—		—		31,903		(97)

Total	$	131,670	$	(773)	$	—	$	—	$	131,670	$	(773)

As of June 30, 2021, the Corporation’s available for sale investment securities consisted of 453 securities, 85 of which were in an unrealized loss position.

As of June 30, 2021, management had not made a decision to sell any of the Corporation’s available for sale investment securities in an unrealized loss position, nor did management consider it more likely than not that it would be required to sell such securities before recovery of their amortized cost basis. Management has evaluated available for sale debt securities that are in an unrealized loss position and has determined that the decline in value is unrelated to credit loss and is related to the change in market interest rates since purchase. Factors considered in this evaluation included the extent to which fair value is less than amortized cost, any explicit or implicit guarantees by the U.S. government, any changes to the rating of the security by the rating agency, and adverse conditions specifically related to the security, among other factors. As of June 30, 2021, approximately 84.6% of the Corporation’s available for sale investment securities were U.S. Treasuries or mortgage-backed securities or collateral mortgage obligations which were issued or guaranteed by U.S. government-sponsored entities and agencies. In addition, none of the available for sale debt securities held by the Corporation are past due as of June 30, 2021. Accrued interest receivable on available for sale debt securities, which is reported in Accrued interest receivable on the Consolidated Balance Sheet, totaled $2.3 million at June 30, 2021 and is excluded from the estimate of credit losses.

As of June 30, 2021 and December 31, 2020, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of shareholders’ equity.

As of June 30, 2021 and December 31, 2020, securities having a fair value of $218.7 million and $282.3 million, respectively, were specifically pledged as collateral for public funds, trust deposits, the Federal Reserve Bank of Philadelphia (the “FRB”) discount window program, Federal Home Loan Bank (“FHLB”) borrowings, collateral requirements in derivative contracts, and other purposes. Advances by the FHLB are collateralized by a blanket lien on non-pledged, mortgage-related loans as part of the Corporation’s borrowing agreement with the FHLB as well as certain securities individually pledged by the Corporation.

The amortized cost and fair value of available for sale investment and mortgage-related securities available for sale as of June 30, 2021 and December 31, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	June 30, 2021				December 31, 2020
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Investment securities:
Due in one year or less	$	2,249	$	2,253	$	502,465	$	502,489
Due after one year through five years	23,944		24,666		18,679		19,167
Due after five years through ten years	103,722		102,604		77,433		77,681
Due after ten years	101,049		101,485		102,266		102,507
Subtotal	230,964		231,008		700,843		701,844
Mortgage-related securities(1)	488,840		497,730		460,255		473,120

Total	$	719,804	$	728,738	$	1,161,098	$	1,174,964

(1) Expected maturities of mortgage-related securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The amortized cost and fair value of investment securities held to maturity as of June 30, 2021 and December 31, 2020 are as follows:

As of June 30, 2021


(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Mortgage-backed securities	$	12,532	$	352	$	(123)	$	12,761

As of December 31, 2020


(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Mortgage-backed securities	$	14,759	$	451	$	(24)	$	15,186

The following table presents the aggregate amount of gross unrealized losses as of June 30, 2021 and December 31, 2020 on held to maturity securities classified according to the amount of time those securities have been in a continuous unrealized loss position:

As of June 30, 2021


	Less than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-backed securities	$	4,062	$	(123)	$	—	$	—	$	4,062	$	(123)

As of December 31, 2020


	Less than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-backed securities	$	4,224	$	(24)	$	—	$	—	$	4,224	$	(24)

As of June 30, 2021, two of the Corporation’s held to maturity investment securities were in an unrealized loss position. The Corporation’s held to maturity debt securities consist of mortgage-backed securities issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. With respect to these securities, the bank considers the history of credit losses, current conditions and reasonable and supportable forecasts, which may indicate that the expectation that nonpayment of the amortized cost basis is or continues to be zero, even if the U.S. government were to default. The bank does not record expected credit losses for these securities. Accrued interest receivable on held to maturity debt securities totaled $31 thousand at June 30, 2021 and is excluded from the estimate of credit losses.

The amortized cost and fair value of held to maturity investment securities as of June 30, 2021 and December 31, 2020, by contractual maturity, are shown below:


	June 30, 2021				December 31, 2020
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Mortgage-backed securities(1)	$	12,532	$	12,761	$	14,759	$	15,186

As of June 30, 2021 and December 31, 2020, the Corporation’s investment securities held in trading accounts totaled $8.3 million and $8.6 million, respectively, and primarily consist of deferred compensation trust accounts which are invested in listed mutual funds whose diversification is at the discretion of the deferred compensation plan participants and rabbi trust accounts established to fund certain unqualified pension obligations. Investment securities held in trading accounts are reported at fair value, with adjustments in fair value reported through income. Changes in the fair value of investments held in the deferred compensation trust accounts create corresponding changes in the liability to the deferred compensation plan participants.