Investments

3 Months Ended

Mar. 31, 2020

The following table presents a summary of investment securities at March 31, 2020 and December 31, 2019:


	Amortized Cost			Unrealized								Fair Value
								Gains			Losses
			(In thousands)
At March 31, 2020
Available-for-sale securities at fair value:
U.S. government and agencies	$	19,957		$	1,130	$	—		$	21,087
Government-sponsored entities	154,844			5,598		—			160,442
Municipal bonds	319,844			12,784		(128)			332,500
Mortgage-backed securities (1)	466,706			12,670		(239)			479,137
Total	$	961,351		$	32,182	$	(367)		$	993,166

Held-to-maturity securities at amortized cost:

Mortgage-backed securities (1)	$	45,395		$	731	$	(30)		$	46,096
Total	$	45,395		$	731	$	(30)		$	46,096

Equity securities at fair value:
Money market mutual funds (2)	$	23,080		$	—	$	—		$	23,080
Total	$	23,080		$	—	$	—		$	23,080

At December 31, 2019
Available-for-sale securities at fair value:
U.S. government and agencies	$	19,955		$	42	$	(57)		$	19,940
Government-sponsored entities	154,963			1,292		—			156,255
Municipal bonds	312,977			12,551		(73)			325,455
Mortgage-backed securities (1)	479,005			1,117		(3,488)			476,634
Total	$	966,900		$	15,002	$	(3,618)		$	978,284

Held-to-maturity securities at amortized cost:

Mortgage-backed securities (1)	48,212			53		(316)			47,949
Total	$	48,212		$	53	$	(316)		$	47,949

Equity securities at fair value:
Money market mutual funds (2)	$	18,810		$	—	$	—		$	18,810
Total	$	18,810		$	—	$	—		$	18,810

_____________________

(1)All mortgage-backed securities are guaranteed by the U.S. government, U.S. government agencies, or government-sponsored entities.

(2)Money market mutual funds maintain a constant net asset value of $1.00 and therefore have no unrealized gain or loss.

The Company adopted ASU 2016-13 as of January 1, 2020. Under ASU 2016-13, the Company is required to assess the investment portfolio for credit impairment. The Company considers the held-to-maturity portfolio to meet the "zero loss" expectation requirements. All held-to-maturity securities owned by the Company are AAA rated mortgage-backed securities that are backed by the guarantees of U.S. government, U.S. government agencies or government sponsored entities. The Company has experienced zero losses for these securities. In addition, as of March 31, 2020, no held-to-maturity securities were past due. Therefore, no credit allowance was recorded on the held-to-maturity investment portfolio. The Company evaluated the available-for-sale investment securities on a security by security basis and identified no security with impairment. Therefore, no credit allowance was booked on the available-for-sale investment portfolio. See Part I. Item 1. “Notes to Unaudited Consolidated Financial Statements - Note 15: Recent Accounting Pronouncements” for additional information on ASU 2016-13.

The following table presents the maturities of available-for-sale investment securities, based on contractual maturity, as of March 31, 2020. Certain securities are callable before their final maturity. Additionally, certain securities (such as mortgage-backed securities) are shown within the table below based on their final (contractual) maturity, but due to prepayments and amortization are expected to have shorter lives.


	Available-for-sale Securities
			Amortized Cost			Fair Value
			(In thousands)
Within one year	$	33,686		$	33,916
After one, but within five years	312,665			322,256
After five, but within ten years	230,955			239,899
Greater than ten years	384,045			397,095
Total	$	961,351		$	993,166

The following table presents the maturities of held-to-maturity investment securities, based on contractual maturity, as of March 31, 2020.


	Held-to-maturity Securities
			Amortized Cost			Fair Value
			(In thousands)


After five, but within ten years	$	37,086		$	37,569
Greater than ten years	8,309			8,527
Total	$	45,395		$	46,096

The following table presents the maturities of equity securities, based on contractual maturity, as of March 31, 2020.


	Equity Securities
			Amortized Cost			Fair Value
			(In thousands)
Within one year	$	23,080		$	23,080



Total	$	23,080		$	23,080

During the three months ended March 31, 2020 and 2019, there were no sales of available-for-sale, held-to- maturity, or equity securities.

The following tables present information regarding securities at March 31, 2020 and December 31, 2019 having temporary impairment, due to the fair values having declined below the amortized cost of the individual securities, and the time period that the investments have been temporarily impaired.


	Less than 12 months						12 months or longer						Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		# of Securities
	(In thousands, except number of securities)
March 31, 2020
Available-for-sale securities


Municipal bonds	$	14,009	$	(128)	$	—	$	—	$	14,009	$	(128)	3
Mortgage-backed securities (1)	3,568		(25)		18,972		(214)		22,540		(239)		36

Total	$	17,577	$	(153)	$	18,972	$	(214)	$	36,549	$	(367)	39

Held-to-maturity securities

Mortgage-backed securities (1)	$	—	$	—	$	4,442	$	(30)	$	4,442	$	(30)	2
Total	$	—	$	—	$	4,442	$	(30)	$	4,442	$	(30)	2


	Less than 12 months						12 months or longer						Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		# of Securities
	(In thousands, except number of securities)
December 31, 2019
Available-for-sale securities
U.S. government and agencies	$	9,899	$	(57)	$	—	$	—	$	9,899	$	(57)	1
Government-sponsored entities	1,725		—		—		—		1,725		—		1
Municipal bonds	9,149		(73)		—		—		9,149		(73)		4
Mortgage-backed securities (1)	140,723		(1,016)		187,043		(2,472)		327,766		(3,488)		85

Total	$	161,496	$	(1,146)	$	187,043	$	(2,472)	$	348,539	$	(3,618)	91

Held-to-maturity securities
Mortgage-backed securities (1)	$	10,328	$	(11)	$	30,451	$	(305)	$	40,779	$	(316)	14
Total	$	10,328	$	(11)	$	30,451	$	(305)	$	40,779	$	(316)	14

_____________________

(1)All mortgage-backed securities are guaranteed by the U.S. government, U.S. government agencies, or government-sponsored entities.

As of March 31, 2020, the mortgage-backed securities in the first table above had current Standard and Poor’s credit rating of at least AAA. As of March 31, 2020, the municipal bonds in the first table above had a current Standard and Poor’s credit rating of at least AAA. As of March 31, 2020, the Company determined that the unrealized losses on investments, since their purchase, is primarily attributed to changes in interest rates and not as a result of the deterioration of credit quality. As of March 31, 2020, the Company had no intent to sell any securities in an unrealized loss position and it is not more likely than not that the Company would be forced to sell any of these securities prior to the full recovery of all unrealized loss amounts.

Other investments

The Company invests in low-income housing tax credits, which are included in other assets, to encourage private capital investment in the construction and rehabilitation of low-income housing. The Company makes these investments as an indirect subsidy that allows investors, such as the Company, in a flow-through limited liability entity, such as limited partnerships or limited liability companies that manage or invest in qualified affordable housing projects, to receive the benefits of the tax credits allocated to the entity that owns the qualified affordable housing project. The Company also holds partnership interests in venture capital funds formed to provide financing to small businesses and to promote community development.

Other investments, which are included in other assets, can be temporarily impaired when the fair values decline below the amortized costs of the individual investments. There were no other investments with unrealized losses as of March 31, 2020 or December 31, 2019. The Company’s other investments primarily include low income housing partnerships which generate tax credits. The Company also holds partnership interests in venture capital funds formed to provide financing to small businesses and to promote community development. The Company had $66.1 million and $65.5 million in other investments included in other assets as of March 31, 2020 and December 31, 2019, respectively.