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Investment Securities
 3 Months Ended
Mar. 31, 2020
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:
 
March 31, 2020
 
December 31, 2019
(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
$
155,853

 
$
1,807

 
$
(319
)
 
$
157,341

 
$
135,361

 
$
722

 
$
(436
)
 
$
135,647

Mortgage-backed securities, residential
461,700

 
13,156

 
(1,305
)
 
473,551

 
500,245

 
3,185

 
(1,551
)
 
501,879

Mortgage-backed securities, multifamily
53,026

 
1,500

 
(18
)
 
54,508

 
48,675

 
633

 
(123
)
 
49,185

Asset-backed securities
43,064

 
—

 
(1,951
)
 
41,113

 
—

 
—

 
—

 
—

Obligations of states and political subdivisions
77,353

 
1,023

 
(913
)
 
77,463

 
58,979

 
1,077

 
(35
)
 
60,021

Debt securities
9,000

 
114

 
—

 
9,114

 
9,000

 
168

 
—

 
9,168

 
$
799,996

 
$
17,600

 
$
(4,506
)
 
$
813,090

 
$
752,260

 
$
5,785

 
$
(2,145
)
 
$
755,900


 
March 31, 2020
 
December 31, 2019
(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
$
31,207

 
$
901

 
$
—

 
$
32,108

 
$
31,335

 
$
182

 
$
(8
)
 
$
31,509

Mortgage-backed securities, residential
70,999

 
2,162

 
—

 
73,161

 
76,229

 
734

 
(176
)
 
76,787

Mortgage-backed securities, multifamily
740

 
44

 
—

 
784

 
1,750

 
4

 
(2
)
 
1,752

Obligations of states and political subdivisions
10,306

 
164

 
—

 
10,470

 
12,161

 
195

 
—

 
12,356

Debt securities
2,500

 
—

 
—

 
2,500

 
2,500

 
—

 
—

 
2,500

 
$
115,752

 
$
3,271

 
$
—

 
$
119,023

 
$
123,975

 
$
1,115

 
$
(186
)
 
$
124,904


The following table lists contractual maturities of investment securities classified as available for sale and held to maturity as of March 31, 2020. 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
$
90,556

 
$
90,722

 
$
6,796

 
$
6,831

Due after one year through five years
68,557

 
70,198

 
30,495

 
31,482

Due after five years through ten years
38,008

 
38,964

 
6,722

 
6,765

Due after ten years
45,085

 
44,034

 
—

 
—

 
242,206

 
243,918

 
44,013

 
45,078

Mortgage-backed and asset-backed securities
557,790

 
569,172

 
71,739

 
73,945

Total securities
$
799,996

 
$
813,090

 
$
115,752

 
$
119,023


The following table shows proceeds from sales of available-for-sale securities, gross gains and gross losses on sales and calls of securities for the periods indicated:
 
 
For the Three Months Ended March 31,
(in thousands)
 
2020
 
2019
Sales proceeds
 
$
94,696

 
$
—

Gross gains
 
569

 
—

Gross losses
 
(227
)
 
—


Gains or losses on sales of securities are based on the net proceeds and the adjusted carrying amount of the securities sold using the specific identification method.
Securities with a carrying value of approximately $640.3 million and $581.1 million at March 31, 2020 and December 31, 2019, respectively, were pledged to secure public deposits and for other purposes required by applicable laws and regulations.
The following tables indicate the length of time individual securities have been in a continuous unrealized loss position for the periods presented:
March 31, 2020
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
AVAILABLE FOR SALE
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and U.S. government agencies
$
74,745

 
$
28

 
$
19,355

 
$
291

 
11

 
$
94,100

 
$
319

Mortgage-backed securities, residential
51,693

 
919

 
8,180

 
386

 
24

 
59,873

 
1,305

Mortgage-backed securities, multifamily
2,801

 
16

 
4,257

 
2

 
2

 
7,058

 
18

Asset-backed securities
41,112

 
1,951

 
—

 
—

 
6

 
41,112

 
1,951

Obligations of states and political subdivisions
24,318

 
913

 
—

 
—

 
11

 
24,318

 
913

 
$
194,669

 
$
3,827

 
$
31,792

 
$
679

 
54

 
$
226,461

 
$
4,506

There are no unrealized losses for held-to-maturity securities at March 31, 2020.
December 31, 2019
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
AVAILABLE FOR SALE
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and U.S. government agencies
$
11,625

 
$
39

 
$
41,617

 
$
397

 
11

 
$
53,242

 
$
436

Mortgage-backed securities, residential
125,782

 
561

 
99,489

 
990

 
86

 
225,271

 
1,551

Mortgage-backed securities, multifamily
7,651

 
118

 
4,878

 
5

 
3

 
12,529

 
123

Obligations of states and political subdivisions
373

 
2

 
6,559

 
33

 
5

 
6,932

 
35

 
$
145,431

 
$
720

 
$
152,543

 
$
1,425

 
105

 
$
297,974

 
$
2,145

HELD TO MATURITY
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agencies
$
3,195

 
$
6

 
$
5,102

 
$
2

 
2

 
$
8,297

 
$
8

Mortgage-backed securities, residential
12,462

 
46

 
10,592

 
130

 
16

 
23,054

 
176

Mortgage-backed securities, multifamily
—

 
—

 
998

 
2

 
1

 
998

 
2

 
$
15,657

 
$
52

 
$
16,692

 
$
134

 
19

 
$
32,349

 
$
186


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 $16.9 million and $16.5 million at March 31, 2020 and December 31, 2019, respectively. The Company recorded purchases of $1.1 million and $95,000 for the three months ended March 31, 2020 and 2019, respectively. For the three months ended March 31, 2020, the Company recorded no sales of equity securities and recorded proceeds from sales of equity securities of $1.1 million for the three months ended March 31, 2019. The Company recorded $653,000 in market value losses on equity securities in noninterest income for the three months ended March 31, 2020, and $353,000 in market value gains on equity securities for the three months ended March 31, 2019.
As of March 31, 2020, the equity investments in other financial institutions and Community Reinvestment funds had a market value of $915,000 and $16.0 million, respectively. The Community Reinvestment funds include $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 March 31, 2020, the net amortized cost equaled the market value of the investment. There are no unfunded commitments related to these investments.
The Community Reinvestment funds also include $12.5 million of investment in government guaranteed loans, mortgage-backed securities, small business loans and other instruments supporting affordable housing and economic development as of March 31, 2020. 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.