Investment Securities

9 Months Ended

Sep. 30, 2019

(4.)INVESTMENT SECURITIES

The amortized cost and fair value of investment securities are summarized below (in thousands):

	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
September 30, 2019
Securities available for sale:
U.S. Government agency and government sponsored enterprises	$	71,522	$	1,288	$	14	$	72,796
Mortgage-backed securities:
Federal National Mortgage Association		264,435		4,100		688		267,847
Federal Home Loan Mortgage Corporation		35,080		412		179		35,313
Government National Mortgage Association		4,523		70		—		4,593
Collateralized mortgage obligations:
Federal National Mortgage Association		9,269		—		34		9,235
Federal Home Loan Mortgage Corporation		5,016		—		17		4,999
Privately issued		—		658		—		658
Total mortgage-backed securities		318,323		5,240		918		322,645
Total available for sale securities	$	389,845	$	6,528	$	932	$	395,441
Securities held to maturity:
State and political subdivisions	$	197,743	$	3,529	$	5	$	201,267
Mortgage-backed securities:
Federal National Mortgage Association		10,798		229		1		11,026
Federal Home Loan Mortgage Corporation		4,048		95		26		4,117
Government National Mortgage Association		38,084		375		40		38,419
Collateralized mortgage obligations:
Federal National Mortgage Association		53,179		228		330		53,077
Federal Home Loan Mortgage Corporation		67,548		444		261		67,731
Government National Mortgage Association		14,905		42		98		14,849
Total mortgage-backed securities		188,562		1,413		756		189,219
Total held to maturity securities	$	386,305	$	4,942	$	761	$	390,486
December 31, 2018
Securities available for sale:
U.S. Government agency and government sponsored enterprises	$	155,102	$	—	$	3,074	$	152,028
Mortgage-backed securities:
Federal National Mortgage Association		258,984		44		6,325		252,703
Federal Home Loan Mortgage Corporation		35,962		13		1,275		34,700
Government National Mortgage Association		5,364		21		76		5,309
Collateralized mortgage obligations:
Federal National Mortgage Association		133		—		—		133
Federal Home Loan Mortgage Corporation		37		—		—		37
Privately issued		—		767		—		767
Total mortgage-backed securities		300,480		845		7,676		293,649
Total available for sale securities	$	455,582	$	845	$	10,750	$	445,677

(4.)INVESTMENT SECURITIES (Continued)

	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2018 (continued)
Securities held to maturity:
State and political subdivisions	$	234,845	$	876	$	1,211	$	234,510
Mortgage-backed securities:
Federal National Mortgage Association		11,602		8		261		11,349
Federal Home Loan Mortgage Corporation		4,583		—		193		4,390
Government National Mortgage Association		37,450		14		923		36,541
Collateralized mortgage obligations:
Federal National Mortgage Association		62,103		1		2,179		59,925
Federal Home Loan Mortgage Corporation		78,200		—		2,597		75,603
Government National Mortgage Association		17,798		—		535		17,263
Total mortgage-backed securities		211,736		23		6,688		205,071
Total held to maturity securities	$	446,581	$	899	$	7,899	$	439,581

Investment securities with a total fair value of $655.0 million and $751.0 million at September 30, 2019 and December 31, 2018, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

Sales of securities available for sale were as follows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Proceeds from sales	$	65,427	$	21,470	$	110,042	$	27,238
Gross realized gains		1,608		64		1,811		73
Gross realized losses		—		159		90		161

The scheduled maturities of securities available for sale and securities held to maturity at September 30, 2019 are shown below (in thousands). Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

	Amortized		Fair
	Cost		Value
Debt securities available for sale:
Due in one year or less	$	13,730	$	13,702
Due from one to five years		79,480		80,736
Due after five years through ten years		169,611		172,994
Due after ten years		127,024		128,009
Total available for sale securities	$	389,845	$	395,441
Debt securities held to maturity:
Due in one year or less	$	52,692	$	53,043
Due from one to five years		128,065		130,679
Due after five years through ten years		51,848		52,333
Due after ten years		153,700		154,431
Total held to maturity securities	$	386,305	$	390,486

(4.)INVESTMENT SECURITIES (Continued)

Unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows (in thousands):

	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
September 30, 2019
Securities available for sale:
U.S. Government agency and government sponsored enterprises	$	—	$	—	$	8,986	$	14	$	8,986	$	14
Mortgage-backed securities:
Federal National Mortgage Association		63,435		548		21,217		140		84,652		688
Federal Home Loan Mortgage Corporation		889		6		9,813		173		10,702		179
Government National Mortgage Association		—		—		—		—		—		—
Collateralized mortgage obligations:
Federal National Mortgage Association		5,178		34		16		—		5,194		34
Federal Home Loan Mortgage Corporation		4,966		17		—		—		4,966		17
Total mortgage-backed securities		74,468		605		31,046		313		105,514		918
Total available for sale securities		74,468		605		40,032		327		114,500		932
Securities held to maturity:
State and political subdivisions		2,011		5		—		—		2,011		5
Mortgage-backed securities:
Federal National Mortgage Association		—		—		1,078		1		1,078		1
Federal Home Loan Mortgage Corporation		—		—		2,621		26		2,621		26
Government National Mortgage Association		848		1		5,799		39		6,647		40
Collateralized mortgage obligations:
Federal National Mortgage Association		8,207		35		23,372		295		31,579		330
Federal Home Loan Mortgage Corporation		11,631		26		22,115		235		33,746		261
Government National Mortgage Association		3,575		52		3,875		46		7,450		98
Total mortgage-backed securities		24,261		114		58,860		642		83,121		756
Total held to maturity securities		26,272		119		58,860		642		85,132		761
Total temporarily impaired securities	$	100,740	$	724	$	98,892	$	969	$	199,632	$	1,693
December 31, 2018
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	—	$	—	$	152,028	$	3,074	$	152,028	$	3,074
Mortgage-backed securities:
Federal National Mortgage Association		251		1		247,615		6,324		247,866		6,325
Federal Home Loan Mortgage Corporation		—		—		33,918		1,275		33,918		1,275
Government National Mortgage Association		—		—		4,667		76		4,667		76
Collateralized mortgage obligations:
Federal National Mortgage Association		—		—		56		—		56		—
Federal Home Loan Mortgage Corporation		—		—		6		—		6		—
Total mortgage-backed securities		251		1		286,262		7,675		286,513		7,676
Total available for sale securities		251		1		438,290		10,749		438,541		10,750

(4.)INVESTMENT SECURITIES (Continued)

	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
December 31, 2018 (continued)
Securities held to maturity:
State and political subdivisions		35,751		91		49,534		1,120		85,285		1,211
Mortgage-backed securities:
Federal National Mortgage Association		1,518		3		8,695		258		10,213		261
Federal Home Loan Mortgage Corporation		1,467		5		2,923		188		4,390		193
Government National Mortgage Association		11,783		82		22,516		841		34,299		923
Collateralized mortgage obligations:
Federal National Mortgage Association		—		—		57,973		2,179		57,973		2,179
Federal Home Loan Mortgage Corporation		—		—		75,603		2,597		75,603		2,597
Government National Mortgage Association		—		—		17,263		535		17,263		535
Total mortgage-backed securities		14,768		90		184,973		6,598		199,741		6,688
Total held to maturity securities		50,519		181		234,507		7,718		285,026		7,899
Total temporarily impaired securities	$	50,770	$	182	$	672,797	$	18,467	$	723,567	$	18,649

The total number of security positions in the investment portfolio in an unrealized loss position at September 30, 2019 was 109 compared to 571 at December 31, 2018. At September 30, 2019, the Company had positions in 70 investment securities with a fair value of $98.9 million and a total unrealized loss of $969 thousand that have been in a continuous unrealized loss position for more than 12 months. At September 30, 2019, there were a total of 39 security positions in the Company’s investment portfolio with a fair value of $100.7 million and a total unrealized loss of $724 thousand that had been in a continuous unrealized loss position for less than 12 months. At December 31, 2018, the Company had positions in 435 investment securities with a fair value of $672.8 million and a total unrealized loss of $18.5 million that had been in a continuous unrealized loss position for more than 12 months. At December 31, 2018, there were a total of 136 security positions in the Company’s investment portfolio with a fair value of $50.8 million and a total unrealized loss of $182 thousand that had been in a continuous unrealized loss position for less than 12 months. The unrealized loss on investment securities was predominantly caused by changes in market interest rates subsequent to purchase. The fair value of most of the investment securities in the Company’s portfolio fluctuates as market interest rates change.

The Company reviews investment securities on an ongoing basis for the presence of other than temporary impairment (“OTTI”) with formal reviews performed quarterly. When evaluating debt securities for OTTI, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intention to sell the debt security or whether it is more likely than not that it will be required to sell the debt security before its anticipated recovery. The assessment of whether OTTI exists involves a high degree of subjectivity and judgment and is based on the information then available to management. There was no impairment recorded during the nine months ended September 30, 2019 and 2018.

Based on management’s review and evaluation of the Company’s debt securities as of September 30, 2019, the debt securities with unrealized losses were not considered to be OTTI. As of September 30, 2019, the Company did not intend to sell any of the securities in a loss position and believes that it is not likely that it will be required to sell any such securities before the anticipated recovery of amortized cost. Accordingly, as of September 30, 2019, management has concluded that unrealized losses on its investment securities are temporary and no further impairment loss has been realized in the Company’s consolidated statements of income.