Investments

6 Months Ended

Jun. 30, 2020

The following table presents a summary of investment securities at June 30, 2020 and December 31, 2019:


	Amortized Cost			Unrealized								Fair Value
								Gains			Losses
			(In thousands)
At June 30, 2020
Available-for-sale securities at fair value:
U.S. government and agencies	$	19,959		$	1,162	$	—		$	21,121
Government-sponsored entities	153,225			5,718		—			158,943
Municipal bonds	315,056			18,899		—			333,955
Mortgage-backed securities (1)	471,610			17,515		(174)			488,951
Total	$	959,850		$	43,294	$	(174)		$	1,002,970

Held-to-maturity securities at amortized cost:

Mortgage-backed securities (1)	$	42,495		$	888	$	(32)		$	43,351
Total	$	42,495		$	888	$	(32)		$	43,351

Equity securities at fair value:
Money market mutual funds (2)	$	24,492		$	—	$	—		$	24,492
Total	$	24,492		$	—	$	—		$	24,492

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 June 30, 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 June 30, 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	$	45,957		$	46,277
After one, but within five years	301,995			314,345
After five, but within ten years	231,164			244,374
Greater than ten years	380,734			397,974
Total	$	959,850		$	1,002,970

The following table presents the maturities of held-to-maturity investment securities, based on contractual maturity, as of June 30, 2020.


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


After five, but within ten years	$	34,732		$	35,377
Greater than ten years	7,763			7,974
Total	$	42,495		$	43,351

The following table presents the maturities of equity securities, based on contractual maturity, as of June 30, 2020.


	Equity Securities
			Amortized Cost			Fair Value
			(In thousands)
Within one year	$	24,492		$	24,492



Total	$	24,492		$	24,492

During the three and six months ended June 30, 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 June 30, 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)
June 30, 2020
Available-for-sale securities



Mortgage-backed securities (1)	$	20,871	$	(45)	$	10,622	$	(129)	$	31,493	$	(174)	28

Total	$	20,871	$	(45)	$	10,622	$	(129)	$	31,493	$	(174)	28

Held-to-maturity securities

Mortgage-backed securities (1)	$	2,135	$	(9)	$	2,024	$	(23)	$	4,159	$	(32)	2
Total	$	2,135	$	(9)	$	2,024	$	(23)	$	4,159	$	(32)	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 June 30, 2020, the mortgage-backed securities in the first table above had current Standard and Poor’s credit rating of at least AAA. As of June 30, 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 June 30, 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 June 30, 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 small business investment companies formed to provide financing to small businesses and to promote community development. The Company had $74.8 million and $65.5 million in other investments included in Other assets as of June 30, 2020 and December 31, 2019, respectively.