XML 26 R15.htm IDEA: XBRL DOCUMENT

Securities

9 Months Ended

Sep. 30, 2020

NOTE 7. Securities

This table provides the major components of debt securities available for sale ("AFS") and equity securities with readily determinable fair values ("equity securities") at amortized cost and estimated fair value at September 30, 2020 and December 31, 2019:


	September 30, 2020								December 31, 2019
			Gross		Gross						Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Amortized		unrealized		unrealized		Estimated
(In thousands)	cost		gains		losses		fair value		cost		gains		losses		fair value
Available for sale:
U.S. Government sponsored entities	$	2,749	$	14	$	—	$	2,763	$	5,751	$	4	$	(2)	$	5,753
State and political subdivisions		3,018		33		—		3,051		4,992		174		(12)		5,154
Residential mortgage-backed securities		18,943		746		(4)		19,685		27,698		372		(106)		27,964
Corporate and other securities		24,153		131		(1,070)		23,214		25,442		230		(268)		25,404
Total debt securities available for sale	$	48,863	$	924	$	(1,074)	$	48,713	$	63,883	$	780	$	(388)	$	64,275
Equity securities:
Total equity securities	$	2,112	$	—	$	(438)	$	1,674	$	2,218	$	142	$	(71)	$	2,289

This table provides the remaining contractual maturities and yields of securities within the investment portfolios. The carrying value of securities at September 30, 2020 is distributed by contractual maturity. Mortgage-backed securities and other securities, which may have principal prepayment provisions, are distributed based on contractual maturity. Expected maturities will differ materially from contractual maturities as a result of early prepayments and calls.


					After one through				After five through								Total carrying
	Within one year				five years				ten years				After ten years				value
(In thousands, except percentages)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Available for sale at fair value:
U.S. Government sponsored entities	$	2,763	1.58	%	$	—	—	%	$	—	—	%	$	—	—	%	$	2,763	1.58	%
State and political subdivisions		2,053	2.50			284	1.90			—	—			714	2.74			3,051	2.73
Residential mortgage-backed securities		2,596	1.25			15,171	2.36			292	4.89			1,626	2.57			19,685	2.27
Corporate and other securities		5,061	5.02			9,657	4.70			3,986	1.77			4,510	3.21			23,214	4.01
Total debt securities available for sale	$	12,473	3.12	%	$	25,112	3.28	%	$	4,278	1.98	%	$	6,850	3.01	%	$	48,713	3.09	%
Equity Securities at fair value:
Total equity securities	$	—	—	%	$	—	—	%	$	—	—	%	$	1,674	2.91	%	$	1,674	2.91	%

The fair value of securities with unrealized losses by length of time that the individual securities have been in a continuous unrealized loss position at September 30, 2020 and December 31, 2019 are as follows:

September 30, 2020

Less than 12 months

12 months and greater

Total

number in a

Estimated

Unrealized

Estimated

Unrealized

Estimated

Unrealized

(In thousands, except number in a loss position)

loss position

fair value

loss

fair value

loss

fair value

loss

Available for sale:

Residential mortgage-backed securities

—

321

(4)

321

(4)

Corporate and other securities

3,769

(52)

9,239

(1,018)

13,008

(1,070)

Total temporarily impaired securities

3,769

(52)

9,560

(1,022)

13,329

(1,074)


	December 31, 2019
		Less than 12 months				12 months and greater				Total
	Total
	number in a	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
(In thousands, except number in a loss position)	loss position	fair value		loss		fair value		loss		fair value		loss
Available for sale:
U.S. Government sponsored entities	1	$	—	$	—	$	1,995	$	(2)	$	1,995	$	(2)
State and political subdivisions	1		—		—		1,013		(12)		1,013		(12)
Residential mortgage-backed securities	10		3,707		(27)		4,996		(79)		8,703		(106)
Corporate and other securities	6		3,366		(13)		3,735		(255)		7,101		(268)
Total temporarily impaired securities	18	$	7,073	$	(40)	$	11,739	$	(348)	$	18,812	$	(388)

Unrealized Losses

The unrealized losses in each of the categories presented in the tables above are discussed in the paragraphs that follow:

U.S. government sponsored entities and state and political subdivision securities: The unrealized losses on investments in these types of securities were caused by the increase in interest rate spreads or the increase in interest rates at the long end of the Treasury curve. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the par value of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than temporarily impaired as of September 30, 2020 or December 31, 2019.

Residential and commercial mortgage-backed securities: The unrealized losses on investments in mortgage-backed securities were caused by increases in interest rate spreads or the increase in interest rates at the long end of the Treasury curve. The majority of contractual cash flows of these securities are guaranteed by the Federal National Mortgage Association (FNMA), the Government National Mortgage Association (GNMA) or the Federal Home Loan Mortgage Corporation (FHLMC). It is expected that the securities would not be settled at a price significantly less than the par value of the investment. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired as of September 30, 2020 or December 31, 2019.

Corporate and other securities: Included in this category are corporate and other debt securities. The unrealized losses on corporate and other debt securities were due to widening credit spreads. The Company evaluated the prospects of the issuers and forecasted a recovery period; and as a result determined it did not consider these investments to be other-than-temporarily impaired as of September 30, 2020 or December 31, 2019. Because the Company does not intend to sell the securities and it is not more likely than not that the Company will be required to sell the securities before recovery of its amortized cost basis, which may be at maturity, the Company did not consider these securities to be other-than-temporarily impaired as of September 30, 2020 or December 31, 2019.

Realized Gains and Losses

Gross realized gains and losses on securities for the three and nine months ended September 30, 2020 and 2019 are detailed in the table below:


	For the three months ended September 30,				For the nine months ended September 30,
(In thousands)	2020		2019		2020		2019
Available for sale:
Realized gains	$	16	$	—	$	317	$	—
Realized losses		—		—		—		—
Total debt securities available for sale		16		—		317		—
Net gains on sales of securities	$	16	$	—	$	317	$	—

The net realized gains are included in noninterest income in the Consolidated Statements of Income as net security gains. There were $16 thousand and $317 thousand of gross realized gains during the three and nine months ended September 30, 2020, compared to no gross realized gains during the same period a year ago. There were no gross realized losses for the three and nine months ended September 30, 2020, or 2019.

For the nine months ended September 30, 2020, the net gain is attributed to:

●

the sale of two corporate bonds with a total book value of $2.7 million and resulting gains of $77 thousand,

●

three mortgage-backed securities with a total book value of $2.8 million and resulting gains of $57 thousand,

●

one tax-exempt municipal security with a book value of $381 thousand and resulting gains of $27 thousand,

●

one taxable municipal security with a book value of $456 thousand and resulting gains of $140 thousand, and

●

the call of three tax-exempt municipal securities with a total book value of $1.8 million and resulting gains of $16 thousand.

Equity Securities

Included in this category are Community Reinvestment Act ("CRA") investments and the Company’s current other equity holdings of financial institutions. Equity securities are defined to include (a) preferred, common and other ownership interests in entities including partnerships, joint ventures and limited liability companies and (b) rights to acquire or dispose of ownership interest in entities at fixed or determinable prices.

The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended September 30, 2020 and 2019:


	For the three months ended September 30,				For the nine months ended September 30,
(In thousands)	2020		2019		2020		2019
Net (losses) gains recognized during the period on equity securities	$	(112)	$	18	$	(509)	$	216
Net gains recognized during the period on equity securities sold during the period		—		—		5		—
Unrealized (losses) gains recognized during the reporting period on equity securities still held at the reporting date	$	(112)	$	18	$	(504)	$	216

Pledged Securities

Securities with a carrying value of $2.0 million and $4.0 million at September 30, 2020 and December 31, 2019, respectively, were pledged to secure deposits, secure other borrowings and for other purposes required or permitted by law.