Investment Securities

9 Months Ended

Sep. 30, 2020

Marketable Securities [Abstract]

Investment Securities

7. Investment Securities

The following is a summary of available-for-sale securities:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
At September 30, 2020
Available-for-Sale Securities:
Obligations of U.S. government corporations and agencies	$	39,100	$	1,826	$	—		$	40,926
Mortgage-backed securities		209,430		6,402		(193	)		215,639
Collateralized mortgage obligations		118,940		3,473		(129	)		122,284
Corporate bonds		29,971		223		(206	)		29,988
Obligations of state and political subdivisions		162,784		6,700		(97	)		169,387
Total Available-for-Sale	$	560,225	$	18,624	$	(625	)	$	578,224

As a result of the Merger, securities with a fair value of $262.8 million were acquired on January 31, 2020.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
At December 31, 2019
Available-for-sale
Obligations of U.S. government corporations and agencies	$	2,518	$	6	$	—		$	2,524
Mortgage-backed securities		88,380		1,380		(113	)		89,647
Collateralized mortgage obligations		83,008		814		(85	)		83,737
Corporate bonds		12,011		90		—			12,101
Obligations of state and political subdivisions		91,406		4,042		(9	)		95,439
Total Available-for-Sale	$	277,323	$	6,332	$	(207	)	$	283,448

The amortized cost and fair value of the investment securities portfolio at September 30, 2020, are shown below by contractual maturity. 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. For purposes of the maturity table, mortgage-backed securities (“MBS”) and CMOs which are not due at a single maturity date, have not been allocated over the maturity groupings. These securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

	Available-for-Sale
	Amortized Cost		Fair Value
	(In Thousands)
Due in one year or less	$	8,975	$	8,982
Due after one year through five years		12,351		12,514
Due after five years through ten years		77,033		79,806
Due after ten years		133,496		138,999
MBS/CMO		328,370		337,923
	$	560,225	$	578,224

Investment securities with a carrying amount of $298.5 million at September 30, 2020, were pledged as collateral on public deposits.

The following tables summarize Premier’s securities that were in an unrealized loss position at September 30, 2020, and December 31, 2019:

	Duration of Unrealized Loss Position
	Less than 12 Months					12 Months or Longer				Total
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss		Fair Value		Unrealized Losses
	(In Thousands)
At September 30, 2020
Available-for-sale securities:
Mortgage-backed securities		15,859		(193	)		—		—		15,859		(193	)
Collateralized mortgage obligations		15,342		(129	)		—		—		15,342		(129	)
Corporate bonds		11,020		(206	)		—		—		11,020		(206	)
Obligations of state and political subdivisions		14,011		(97	)		—		—		14,011		(97	)
Total temporarily impaired securities	$	56,232	$	(625	)	$	—	$	—	$	56,232	$	(625	)

	Duration of Unrealized Loss Position
	Less than 12 Months					12 Months or Longer					Total
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Unrealized Losses
	(In Thousands)
At December 31, 2019
Available-for-sale securities:
Mortgage-backed securities-residential	$	13,830	$	(42	)	$	9,721	$	(71	)	$	23,551	$	(113	)
Collateralized mortgage obligations		7,448		(29	)		5,549		(56	)		12,997		(85	)
Obligations of state and political subdivisions		1,413		(9	)		-		-			1,413		(9	)
Total temporarily impaired securities	$	22,691	$	(80	)	$	15,270	$	(127	)	$	37,961	$	(207	)

The Company realized gains from the sale of investment securities totaling $1.5 million in the three and nine month periods ending September 30, 2020.  For the three and nine months ended September 30, 2019, the Company realized gains of $11,000 on the sale of investment securities.   

ASU 2016-13 makes targeted improvements to the accounting for credit losses on securities available for sale. The concept of other than-temporarily impaired has been replaced with the allowance for credit losses. Unlike securities held to maturity, securities available for sale are evaluated on an individual level and pooling of securities is not allowed.

Quarterly, the Company evaluates if any security has a fair value less than its amortized cost. Once these securities are identified, in order to determine whether a decline in fair value resulted from a credit loss or other factors, the Company performs further analysis as outlined below:

• Review the extent to which the fair value is less than the amortized cost and observe the security’s lowest credit rating as reported by third-party credit ratings companies.

• Any securities that are downgraded by a third party ratings company above would be subjected to additional analysis that may include, but is not limited to: changes in market interest rates, changes in securities credit ratings, security type, service area economic factors, financial performance of the issuer/or obligor of the underlying issue and third-party guarantee.

• If the Company determines that a credit loss exists, the credit portion of the allowance will be measured using a DCF analysis using the effective interest rate as of the security’s purchase date. The amount of credit loss the Company records will be limited to the amount by which the amortized cost exceeds the fair value.  As of September 30, 2020, management had determined that no credit loss exists.  

At September 30, 2020, the Company held preferred stock of a bank holding company totaling $1.0 million.    During the three and nine months ended September 30, 2020, $14,000 of unrealized gains were recorded within “Gain on equity securities, net" on the Consolidated Condensed Statements of Income. During the three and nine months ended September 30, 2019, there were no unrealized gains or losses recognized.