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Investment Securities
 9 Months Ended
Sep. 30, 2019
Investments, Debt and Equity Securities [Abstract]  
Investment Securities INVESTMENT SECURITIES
The amortized cost, gross unrealized gains and losses and the fair value of the Company's available for sale and held to maturity investment securities are as follows:
 
September 30, 2019
 
December 31, 2018
(in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AVAILABLE FOR SALE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and U.S. government agencies
$
145,976

 
$
846

 
$
(492
)
 
$
146,330

 
$
143,495

 
$
—

 
$
(2,568
)
 
$
140,927

Mortgage-backed securities, residential
471,178

 
4,171

 
(1,341
)
 
474,008

 
434,208

 
779

 
(8,843
)
 
426,144

Mortgage-backed securities, multifamily
50,164

 
818

 
(92
)
 
50,890

 
21,087

 
67

 
(204
)
 
20,950

Obligations of states and political subdivisions
43,338

 
726

 
(20
)
 
44,044

 
45,951

 
140

 
(586
)
 
45,505

Debt securities
5,000

 
133

 
—

 
5,133

 
5,000

 
92

 
—

 
5,092

 
$
715,656

 
$
6,694

 
$
(1,945
)
 
$
720,405

 
$
649,741

 
$
1,078

 
$
(12,201
)
 
$
638,618


 
September 30, 2019
 
December 31, 2018
(in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HELD TO MATURITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agencies
$
31,974

 
$
234

 
$
(18
)
 
$
32,190

 
$
33,025

 
$
—

 
$
(677
)
 
$
32,348

Mortgage-backed securities, residential
81,503

 
823

 
(148
)
 
82,178

 
75,859

 
169

 
(1,838
)
 
74,190

Mortgage-backed securities, multifamily
1,775

 
15

 
(5
)
 
1,785

 
1,853

 
—

 
(35
)
 
1,818

Obligations of states and political subdivisions
29,363

 
468

 
(30
)
 
29,801

 
37,909

 
113

 
(328
)
 
37,694

Debt securities
6,500

 
41

 
—

 
6,541

 
5,000

 
—

 
(118
)
 
4,882

 
$
151,115

 
$
1,581

 
$
(201
)
 
$
152,495

 
$
153,646

 
$
282

 
$
(2,996
)
 
$
150,932


The following table lists contractual maturities of investment securities classified as available for sale and held to maturity as of September 30, 2019. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
Available for Sale
 
Held to Maturity
(in thousands)
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
 
 
 
 
 
 
 
Due in one year or less
$
29,607

 
$
29,610

 
$
7,751

 
$
7,751

Due after one year through five years
103,697

 
104,533

 
34,577

 
34,959

Due after five years through ten years
43,357

 
44,014

 
24,746

 
25,057

Due after ten years
17,653

 
17,350

 
763

 
765

 
194,314

 
195,507

 
67,837

 
68,532

Mortgage-backed securities
521,342

 
524,898

 
83,278

 
83,963

Total securities
$
715,656

 
$
720,405

 
$
151,115

 
$
152,495


There were no sales of available for sale or held to maturity securities during the nine months ended September 30, 2019 and 2018.
Securities with a carrying value of approximately $576.2 million and $476.3 million at September 30, 2019 and December 31, 2018, respectively, were pledged to secure public deposits and for other purposes required by applicable laws and regulations.
The following tables indicates the length of time individual securities have been in a continuous unrealized loss position for the periods presented:
 
Less Than 12 Months
 
12 Months or Longer
 
Total
(dollars in thousands)
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
Number of
Securities
 
Fair Value
 
Unrealized
Losses
September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
AVAILABLE FOR SALE
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and U.S. government agencies
$
5,180

 
$
31

 
$
56,134

 
$
461

 
12

 
$
61,314

 
$
492

Mortgage-backed securities, residential
84,842

 
284

 
106,968

 
1,057

 
73

 
191,810

 
1,341

Mortgage-backed securities, multifamily
8,236

 
80

 
4,916

 
12

 
3

 
13,152

 
92

Obligations of states and political subdivisions
2,850

 
3

 
3,172

 
17

 
11

 
6,022

 
20

 
$
101,108

 
$
398

 
$
171,190

 
$
1,547

 
99

 
$
272,298

 
$
1,945

HELD TO MATURITY
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agencies
$
3,799

 
$
6

 
$
5,129

 
$
12

 
2

 
$
8,928

 
$
18

Mortgage-backed securities, residential
3,984

 
6

 
13,516

 
142

 
14

 
17,500

 
148

Mortgage-backed securities, multifamily
—

 
—

 
1,007

 
5

 
1

 
1,007

 
5

Obligations of states and political subdivisions
—

 
—

 
5,170

 
30

 
1

 
5,170

 
30

 
$
7,783

 
$
12

 
$
24,822

 
$
189

 
18

 
$
32,605

 
$
201

 
Less Than 12 Months
 
12 Months or Longer
 
Total
(dollars in thousands)
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
Number of
Securities
 
Fair Value
 
Unrealized
Losses
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
AVAILABLE FOR SALE
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and U.S. government agencies
$
20,588

 
$
216

 
$
120,338

 
$
2,352

 
27

 
$
140,926

 
$
2,568

Mortgage-backed securities, residential
10,119

 
58

 
316,851

 
8,785

 
139

 
326,970

 
8,843

Mortgage-backed securities, multifamily
1,977

 
2

 
12,911

 
202

 
4

 
14,888

 
204

Obligations of states and political subdivisions
1,289

 
2

 
26,522

 
584

 
50

 
27,811

 
586

 
$
33,973

 
$
278

 
$
476,622

 
$
11,923

 
220

 
$
510,595

 
$
12,201

HELD TO MATURITY
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agencies
$
—

 
$
—

 
$
32,348

 
$
677

 
6

 
$
32,348

 
$
677

Mortgage-backed securities, residential
8,325

 
59

 
53,761

 
1,779

 
36

 
62,086

 
1,838

Mortgage-backed securities, multifamily
—

 
—

 
1,818

 
35

 
2

 
1,818

 
35

Obligations of states and political subdivisions
1,764

 
8

 
15,580

 
320

 
27

 
17,344

 
328

Debt securities
3,882

 
118

 
—

 
—

 
1

 
3,882

 
118

 
$
13,971

 
$
185

 
$
103,507

 
$
2,811

 
72

 
$
117,478

 
$
2,996


Management has evaluated the securities in the above table and has concluded that none of the securities with unrealized losses has impairments that are other-than-temporary. Fair value below cost is solely due to interest rate movements and is deemed temporary.
Investment securities, including the mortgage-backed securities and corporate securities, are evaluated on a periodic basis to determine if factors are identified that would require further analysis. In evaluating the Company’s securities, management considers the following items:
•
The Company’s ability and intent to hold the securities, including an evaluation of the need to sell the security to meet certain liquidity measures, or whether the Company has sufficient levels of cash to hold the identified security in order to recover the entire amortized cost of the security;
•
The financial condition of the underlying issuer;
•
The credit ratings of the underlying issuer and if any changes in the credit rating have occurred;
•
The length of time the security’s fair value has been less than amortized cost; and
•
Adverse conditions related to the security or its issuer if the issuer has failed to make scheduled payments or other factors.
If the above factors indicate that an additional analysis is required, management will perform a discounted cash flow analysis evaluating the security.
Equity securities at fair value
The Company has an equity securities portfolio which consists of investments in other financial institutions for market appreciation purposes and investments in Community Reinvestment funds. The market value of these investments was $15.6 million and $15.9 million at September 30, 2019 and December 31, 2018, respectively. Upon implementation of Accounting Standards Update 2016-01 - Financial Instruments ("ASU 2016-01"), the Company made a cumulative adjustment of $2.0 million from other comprehensive income to retained earnings as of January 1, 2018. For the nine months ended September 30, 2019, the Company recorded proceeds from sales of equity securities of $1.2 million and recorded proceeds from sales of equity securities of $2.2 million for the nine months ended September 30, 2018. The Company recorded $525,000 in market value gains on equity securities in noninterest income for the nine months ended September 30, 2019, and $384,000 in market value losses on equity securities for the nine months ended September 30, 2018.
As of September 30, 2019, the market value of equity investments in other financial institutions was $1.8 million. The market value of the Community Reinvestment funds at September 30, 2019 was $13.7 million and includes $3.5 million that are primarily invested in community development loans that are guaranteed by the Small Business Administration (“SBA”). Because the funds are primarily guaranteed by the federal government there are minimal changes in market value between accounting periods. These funds can be redeemed with 60 days notice at the net asset value less unpaid management fees with the approval of the fund manager. As of September 30, 2019, the net amortized cost equaled the market value of the investment. There are no unfunded commitments related to these investments.
The Community Reinvestment funds include $10.2 million that are primarily invested in government guaranteed loans, mortgage-backed securities, small business loans and other instruments supporting affordable housing and economic development. The Company may redeem these funds at the net asset value calculated at the end of the current business day less any unpaid management fees. There are no restrictions on redemptions for the holdings in these investments other than the notice required by the fund manager. There are no unfunded commitments related to these investments.