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Section 1: 10-Q (FORM 10-Q)

sfbs20190930_10q.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 10-Q

 

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______to_______

 

Commission file number 001-36452

 

SERVISFIRST BANCSHARES, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware 26-0734029

(State or Other Jurisdiction of 

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 

2500 Woodcrest Place, Birmingham, Alabama 35209
(Address of Principal Executive Offices) (Zip Code)

 

(205) 949-0302

(Registrant's Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, par value $.001 per share

SFBS

The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the  preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

 

Class Outstanding as of October 25, 2019
Common stock, $.001 par value 53,592,013

                                        

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

4

Item 1.

Financial Statements

4

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

42

Item 4.

Controls and Procedures

43

     

PART II. OTHER INFORMATION

43

Item 1.

Legal Proceedings

43

Item 1A.

Risk Factors

43

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

43

Item 3.

Defaults Upon Senior Securities

43

Item 4.

Mine Safety Disclosures

43

Item 5.

Other Information

44

Item 6.

Exhibits

44

 

 

EX-31.01 SECTION 302 CERTIFICATION OF THE CEO

EX-31.02 SECTION 302 CERTIFICATION OF THE CFO

EX-32.01 SECTION 906 CERTIFICATION OF THE CEO

EX-32.02 SECTION 906 CERTIFICATION OF THE CFO

 

 

 

 

 

 

3

 

 

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

 

SERVISFIRST BANCSHARES, INC.

 

CONSOLIDATED BALANCE SHEETS

 

(In thousands, except share and per share amounts)

 
                 

 

   

September 30, 2019

   

December 31, 2018

 
   

(Unaudited)

      (1)  

ASSETS

               

Cash and due from banks

  $ 108,804     $ 97,516  

Interest-bearing balances due from depository institutions

    463,625       360,534  

Federal funds sold

    474,298       223,845  

Cash and cash equivalents

    1,046,727       681,895  

Available for sale debt securities, at fair value

    688,021       590,184  

Held to maturity debt securities (fair value of $250 at September 30, 2019)

    250       -  

Mortgage loans held for sale

    8,691       120  

Loans

    7,022,069       6,533,499  

Less allowance for loan losses

    (77,192 )     (68,600 )

Loans, net

    6,944,877       6,464,899  

Premises and equipment, net

    56,570       57,822  

Accrued interest and dividends receivable

    25,423       24,070  

Deferred tax assets

    24,426       27,277  

Other real estate owned and repossessed assets

    5,337       5,169  

Bank owned life insurance contracts

    152,976       130,649  

Goodwill and other identifiable intangible assets

    14,246       14,449  

Other assets

    37,568       10,848  

Total assets

  $ 9,005,112     $ 8,007,382  

LIABILITIES AND STOCKHOLDERS' EQUITY

               

Liabilities:

               

Deposits:

               

Noninterest-bearing

  $ 1,678,672     $ 1,557,341  

Interest-bearing

    6,045,486       5,358,367  

Total deposits

    7,724,158       6,915,708  

Federal funds purchased

    370,231       288,725  

Other borrowings

    64,693       64,666  

Accrued interest payable

    11,476       10,381  

Other liabilities

    24,017       12,699  

Total liabilities

    8,194,575       7,292,179  

Stockholders' equity:

               

Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at September 30, 2019 and December 31, 2018

    -       -  

Common stock, par value $0.001 per share; 100,000,000 shares authorized; 53,579,113 shares issued and outstanding at September 30, 2019, and 53,375,195 shares issued and outstanding at December 31, 2018

    54       53  

Additional paid-in capital

    219,234       218,521  

Retained earnings

    584,968       500,868  

Accumulated other comprehensive income (loss)

    5,779       (4,741 )

Total stockholders' equity attributable to ServisFirst Bancshares, Inc.

    810,035       714,701  

Noncontrolling interest

    502       502  

Total stockholders' equity

    810,537       715,203  

Total liabilities and stockholders' equity

  $ 9,005,112     $ 8,007,382  

 

(1) Derived from audited financial statements.

See Notes to Consolidated Financial Statements.

 

4

 

 

 

SERVISFIRST BANCSHARES, INC.

 

CONSOLIDATED STATEMENTS OF INCOME

 

(In thousands, except share and per share amounts)

 

(Unaudited)

 
                                 
   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2019

   

2018

   

2019

   

2018

 

Interest income:

                               

Interest and fees on loans

  $ 90,767     $ 78,991     $ 264,901     $ 222,285  

Taxable securities

    4,367       3,276       12,306       9,148  

Nontaxable securities

    316       583       1,155       1,862  

Federal funds sold

    1,768       892       4,985       2,137  

Other interest and dividends

    3,912       316       9,269       1,031  

Total interest income

    101,130       84,058       292,616       236,463  

Interest expense:

                               

Deposits

    24,787       15,210       71,172       36,545  

Borrowed funds

    3,338       1,985       9,576       6,097  

Total interest expense

    28,125       17,195       80,748       42,642  

Net interest income

    73,005       66,863       211,868       193,821  

Provision for loan losses

    6,985       6,624       16,754       14,884  

Net interest income after provision for loan losses

    66,020       60,239       195,114       178,937  

Noninterest income:

                               

Service charges on deposit accounts

    1,735       1,595       5,223       4,833  

Mortgage banking

    1,333       789       2,995       2,096  

Credit card income

    1,868       1,414       5,185       4,030  

Securities gains

    34       186       28       190  

Increase in cash surrender value life insurance

    787       787       2,327       2,350  

Other operating income

    453       294       1,172       922  

Total noninterest income

    6,210       5,065       16,930       14,421  

Noninterest expenses:

                               

Salaries and employee benefits

    15,499       13,070       44,103       39,464  

Equipment and occupancy expense

    2,387       2,193       6,933       6,260  

Professional services

    887       853       3,072       2,582  

FDIC and other regulatory (credits) assessments

    (296 )     675       1,804       2,967  

OREO expense

    78       289       312       765  

Other operating expenses

    6,606       5,544       20,285       17,136  

Total noninterest expenses

    25,161       22,624       76,509       69,174  

Income before income taxes

    47,069       42,680       135,535       124,184  

Provision for income taxes

    9,506       8,120       27,329       23,481  

Net income

    37,563       34,560       108,206       100,703  

Preferred stock dividends

    -       -       31       31  

Net income available to common stockholders

  $ 37,563     $ 34,560     $ 108,175     $ 100,672  
                                 

Basic earnings per common share

  $ 0.70     $ 0.65     $ 2.02     $ 1.89  

Diluted earnings per common share

  $ 0.69     $ 0.64     $ 2.00     $ 1.86  

 

 

See Notes to Consolidated Financial Statements.

 

5

 

 

 

SERVISFIRST BANCSHARES, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

(In thousands)

 

(Unaudited)

 
                                 
   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2019

   

2018

   

2019

   

2018

 

Net income

  $ 37,563     $ 34,560     $ 108,206     $ 100,703  

Other comprehensive income (loss), net of tax:

                               

Unrealized net holding gains (losses) arising during period from securities available for sale, net of tax of $427 and $2,791 for the three and nine months ended September 30, 2019, respectively, and net of benefit of $(733) and $(2,589) for the three and nine months ended September 30, 2018, respectively

    1,443       (2,757 )     10,497       (9,740 )

Reclassification adjustment for net gains on sale of securities available for sale, net of tax of $6 and $5 for the three and nine months ended September 30, 2019, respectively, and $39 and $40 for the three and nine months ended September 30, 2018, respectively

    18       147       23       150  

Other comprehensive income (loss), net of tax

    1,461       (2,610 )     10,520       (9,590 )

Comprehensive income

  $ 39,024     $ 31,950     $ 118,726     $ 91,113  

 

 

See Notes to Consolidated Financial Statements.

  

6

 

 

 

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

 

(In thousands, except share amounts)(Unaudited)

 
                                                         
   

Three Months Ended September 30,

 
   

Preferred Stock

   

Common Stock

   

Additional Paid-in Capital

   

Retained Earnings

   

Accumulated Other Comprehensive Income

   

Noncontrolling interest

   

Total Stockholders' Equity

 

Balance, July 1, 2018

  $ -     $ 53     $ 217,765     $ 443,972     $ (7,178 )   $ 502     $ 655,114  

Common dividends declared, $0.11 per share

    -       -       -       (5,851 )     -       -       (5,851 )

Issue 46,074 shares of common stock upon exercise of stock options

    -       -       465       -       -       -       465  

9,426 shares of common stock withheld in net settlement upon exercise of stock options

    -       -       (370 )     -       -       -       (370 )

Stock-based compensation expense

    -       -       202       -       -       -       202  

Other comprehensive income, net of tax

    -       -       -       -       (2,610 )     -       (2,610 )

Net income

    -       -       -       34,560       -       -       34,560  

Balance, September 30, 2018

  $ -     $ 53     $ 218,062     $ 472,681     $ (9,788 )   $ 502     $ 681,510  
                                                         

Balance, July 1, 2019

  $ -     $ 54     $ 218,658     $ 555,425     $ 4,318     $ 502     $ 778,957  

Common dividends declared, $0.15 per share

    -       -       -       (8,020 )     -       -       (8,020 )

Issue 41,731 shares of common stock upon exercise of stock options

    -       -       571       -       -       -       571  

9,069 shares of common stock withheld in net settlement upon exercise of stock options

    -       -       (289 )     -       -       -       (289 )

Stock-based compensation expense

    -       -       294       -       -       -       294  

Other comprehensive loss, net of tax

    -       -       -       -       1,461       -       1,461  

Net income

    -       -       -       37,563       -       -       37,563  

Balance, September 30, 2019

  $ -     $ 54     $ 219,234     $ 584,968     $ 5,779     $ 502     $ 810,537  

 

 

   

Nine Months Ended September 30,

 
   

Preferred Stock

   

Common Stock

   

Additional Paid-in Capital

   

Retained Earnings

   

Accumulated Other Comprehensive Income

   

Noncontrolling interest

   

Total Stockholders' Equity

 

Balance, January 1, 2018

  $ -     $ 53     $ 217,693     $ 389,554     $ (198 )   $ 502     $ 607,604  

Common dividends paid, $0.22 per share

    -       -       -       (11,694 )     -       -       (11,694 )

Common dividends declared, $0.11 per share

    -       -       -       (5,851 )     -       -       (5,851 )

Preferred dividends paid

    -       -       -       (31 )     -       -       (31 )

Issue 191,371 shares of common stock upon exercise of stock options

    -       -       1,325       -       -       -       1,325  

39,965 shares of common stock withheld in net settlement upon exercise of stock options

    -       -       (1,640 )     -       -       -       (1,640 )

Stock-based compensation expense

    -       -       684       -       -       -       684  

Other comprehensive income, net of tax

    -       -       -       -       (9,590 )     -       (9,590 )

Net income

    -       -       -       100,703       -       -       100,703  

Balance, September 30, 2018

  $ -     $ 53     $ 218,062     $ 472,681     $ (9,788 )   $ 502     $ 681,510  
                                                         

Balance, January 1, 2019

  $ -     $ 53     $ 218,521     $ 500,868     $ (4,741 )   $ 502     $ 715,203  

Common dividends paid, $0.30 per share

    -       -       -       (16,038 )     -       -       (16,038 )

Common dividends declared, $0.15 per share

    -       -       -       (8,037 )     -       -       (8,037 )

Preferred dividends paid

    -       -       -       (31 )     -       -       (31 )

Issue 185,044 shares of common stock upon exercise of stock options

    -       1       1,674       -       -       -       1,675  

54,256 shares of common stock withheld in net settlement upon exercise of stock options

    -       -       (1,742 )     -       -       -       (1,742 )

Stock-based compensation expense

    -       -       781       -       -       -       781  

Other comprehensive loss, net of tax

    -       -       -       -       10,520       -       10,520  

Net income

    -       -       -       108,206       -       -       108,206  

Balance, September 30, 2019

  $ -     $ 54     $ 219,234     $ 584,968     $ 5,779     $ 502     $ 810,537  

 

 

See Notes to Consolidated Financial Statements.

 

7

 

 

 

SERVISFIRST BANCSHARES, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(In thousands) (Unaudited)

 
   

Nine Months Ended September 30,

 
   

2019

   

2018

 

OPERATING ACTIVITIES

               

Net income

  $ 108,206     $ 100,703  

Adjustments to reconcile net income to net cash provided by

               

Deferred tax expense

    2,851       754  

Provision for loan losses

    16,754       14,884  

Depreciation

    2,774       2,548  

Accretion on acquired loans

    (91 )     (147 )

Amortization of core deposit intangible

    203       202  

Net amortization of debt securities available for sale

    2,040       2,268  

Increase in accrued interest and dividends receivable

    (1,353 )     (4,094 )

Stock-based compensation expense

    781       684  

Increase in accrued interest payable

    1,095       3,591  

Proceeds from sale of mortgage loans held for sale

    90,188       81,319  

Originations of mortgage loans held for sale

    (95,764 )     (80,041 )

Net gain on sale of debt securities available for sale

    (28 )     (15 )

Gain on sale of equity securities

    -       (175 )

Gain on sale of mortgage loans held for sale

    (2,995 )     (2,096 )

Net (gain) loss on sale of other real estate owned and repossessed assets

    (6 )     3  

Write down of other real estate owned and repossessed assets

    288       488  

Operating (income) loss of tax credit partnerships

    (16 )     128  

Increase in cash surrender value of life insurance contracts

    (2,327 )     (2,350 )

Net change in other assets, liabilities, and other operating activities

    (19,766 )     (2,608 )

Net cash provided by operating activities

    102,834       116,046  

INVESTMENT ACTIVITIES

               

Purchase of debt securities available for sale

    (186,240 )     (122,821 )

Proceeds from maturities, calls and paydowns of debt securities available for sale

    100,687       63,803  

Proceeds from sale of debt securities available for sale

    -       5,736  

Purchase of debt securities held to maturity

    (250 )     -  

Proceeds from sale of equity securities

    -       305  

Purchase of BOLI contracts

    (20,000 )     -  

Increase in loans

    (505,224 )     (520,610 )

Purchase of premises and equipment

    (1,522 )     (1,530 )

Proceeds from sale of other real estate owned and repossessed assets

    727       1,572  

Net cash used in investing activities

    (611,822 )     (573,545 )

FINANCING ACTIVITIES

               

Net increase in non-interest-bearing deposits

    121,331       64,121  

Net increase in interest-bearing deposits

    687,119       349,556  

Net increase (decrease) in federal funds purchased

    81,506       (55,703 )

Repayment of Federal Home Loan Bank advances

    -       (200 )

Proceeds from exercise of stock options

    1,675       1,325  

Taxes paid in net settlement of tax obligation upon exercise of stock options

    (1,742 )     (1,640 )

Dividends paid on common stock

    (16,038 )     (11,694 )

Dividends paid on preferred stock

    (31 )     (31 )

Net cash provided by financing activities

    873,820       345,734  

Net increase (decrease) in cash and cash equivalents

    364,832       (111,765 )

Cash and cash equivalents at beginning of period

    681,895       477,586  

Cash and cash equivalents at end of period

  $ 1,046,727     $ 365,821  

SUPPLEMENTAL DISCLOSURE

               

Cash paid for:

               

Interest

  $ 79,653     $ 39,051  

Income taxes

    34,464       20,235  

Income tax refund

    (86 )     (2 )

NONCASH TRANSACTIONS

               

Other real estate acquired in settlement of loans

  $ 1,177     $ 1,206  

Internally financed sale of other real estate owned

    -       130  

Dividends declared

    8,037       5,851  

 

 

See Notes to Consolidated Financial Statements.

 

8

 

 

SERVISFIRST BANCSHARES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(Unaudited)

 

 

NOTE 1 - GENERAL

 

The accompanying consolidated financial statements in this report have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, including Regulation S-X and the instructions for Form 10-Q, and have not been audited. These consolidated financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments necessary to present fairly the consolidated financial position and the consolidated results of operations for the interim periods have been made. All such adjustments are of a normal recurring nature. The consolidated results of operations are not necessarily indicative of the consolidated results of operations which ServisFirst Bancshares, Inc. (the “Company”) and its consolidated subsidiaries, including ServisFirst Bank (the “Bank”), may achieve for future interim periods or the entire year. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Form 10-K for the year ended December 31, 2018.

 

All reported amounts are in thousands except share and per share data.

 

Leases

 

The Company leases certain office space and equipment under operating leases. Accounting Standards Update 2016-02,Leases (Topic 842)” requires that operating leases in effect as of date of adoption, January 1, 2019 for the Company, be recognized as a liability to make lease payments and as an asset representing the right to use the asset during the lease term, or “lease liability” and “right-of-use asset”, respectively. The lease liability is measured by the present value of remaining lease payments, discounted at the Company’s incremental borrowing rate.

 

Certain of the leases include one or more renewal options that extend the initial lease term one to five years. The exercise of lease renewal options is typically at the Company’s sole discretion; therefore, a majority of renewals to extend lease terms are not included in the right-of-use assets and lease liabilities as they are not reasonably certain to be exercised. Renewal options are regularly evaluated and when they are reasonably certain to be exercised, are included in lease terms.

 

None of the Company’s leases provide an implicit rate. The Company uses its incremental collateralized borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

 

The Company has made an accounting policy election to not apply the recognition requirements in ASU 2016-02 to short-term leases. The Company has also elected to use the practical expedients allowed by the new standard as follows: 1) forego an assessment of whether any existing contracts are or contain leases, 2) forego an assessment of the classification of existing leases as to whether they are operating leases or capital leases, and 3) forego an assessment of direct costs for any existing leases.

 

 

NOTE 2 - CASH AND CASH EQUIVALENTS

 

Cash on hand, cash items in process of collection, amounts due from banks, and federal funds sold are included in cash and cash equivalents.

 

 

NOTE 3 - EARNINGS PER COMMON SHARE

 

Basic earnings per common share are computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock options.

 

9

 

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2019

   

2018

   

2019

   

2018

 
   

(In Thousands, Except Shares and Per Share Data)

 

Earnings per common share

                               

Weighted average common shares outstanding

    53,544,747       53,171,144       53,508,710       53,134,861  

Net income available to common stockholders

  $ 37,563     $ 34,560     $ 108,175     $ 100,672  

Basic earnings per common share

  $ 0.70     $ 0.65     $ 2.02     $ 1.89  
                                 

Weighted average common shares outstanding

    53,544,747       53,171,144       53,508,710       53,134,861  

Dilutive effects of assumed conversions and exercise of stock options and warrants

    551,621       1,020,078       578,700       1,055,383  

Weighted average common and dilutive potential common shares outstanding

    54,096,368       54,191,222       54,087,410       54,190,244  

Net income available to common stockholders

  $ 37,563     $ 34,560     $ 108,175     $ 100,672  

Diluted earnings per common share

  $ 0.69     $ 0.64     $ 2.00     $ 1.86  

 

 

NOTE 4 - SECURITIES

 

The amortized cost and fair value of available-for-sale and held-to-maturity securities at September 30, 2019 and December 31, 2018 are summarized as follows:

 

           

Gross

   

Gross

         
   

Amortized

   

Unrealized

   

Unrealized

   

Market

 
   

Cost

   

Gain

   

Loss

   

Value

 

September 30, 2019

 

(In Thousands)

 

Securities Available for Sale

                               

U.S. Treasury securities

  $ 51,888     $ 311     $ (1 )   $ 52,198  

Government Agency securities

    18,234       129       (2 )     18,361  

Mortgage-backed securities

    398,818       4,425       (604 )     402,639  

State and municipal securities

    65,270       330       (32 )     65,568  

Corporate debt

    146,551       2,834       (130 )     149,255  

Total

  $ 680,761     $ 8,029     $ (769 )   $ 688,021  

Securities Held to Maturity

                               

State and municipal securities

    250       -       -       250  

Total

  $ 250     $ -     $ -     $ 250  
                                 

December 31, 2018

                               

Securities Available for Sale

                               

U.S. Treasury securities

  $ 58,750     $ 75     $ (397 )   $ 58,428  

Government Agency securities

    18,784       3       (222 )     18,565  

Mortgage-backed securities

    309,244       591       (5,531 )     304,304  

State and municipal securities

    106,465       208       (679 )     105,994  

Corporate debt

    102,982       668       (757 )     102,893  

Total

  $ 596,225     $ 1,545     $ (7,586 )   $ 590,184  

 

 

The amortized cost and fair value of debt securities as of September 30, 2019 and December 31, 2018 by contractual maturity are shown below. Actual maturities may differ from contractual maturities of mortgage-backed securities since the mortgages underlying the securities may be called or prepaid with or without penalty. Therefore, these securities are not included in the maturity categories along with the other categories of debt securities.

 

   

September 30, 2019

   

December 31, 2018

 
   

Amortized Cost

   

Fair Value

   

Amortized Cost

   

Fair Value

 
   

(In thousands)

 

Debt securities available for sale

                               

Due within one year

  $ 55,777     $ 55,973     $ 38,343     $ 38,225  

Due from one to five years

    106,374       107,205       167,873       166,380  

Due from five to ten years

    117,885       120,258       77,811       78,276  

Due after ten years

    1,907       1,946       2,954       2,999  

Mortgage-backed securities

    398,818       402,639       309,244       304,304  
    $ 680,761     $ 688,021     $ 596,225     $ 590,184  
                                 

Debt securities held to maturity

                               

Due from one to five years

  $ 250     $ 250     $ -     $ -  
    $ 250     $ 250     $ -     $ -  

 

 

10

 

 

All mortgage-backed securities are with government-sponsored enterprises (GSEs) such as Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Bank, and Federal Home Loan Mortgage Corporation.

 

The carrying value of debt securities pledged to secure public funds on deposit and for other purposes as required by law as of September 30, 2019 and December 31, 2018 was $408.9 million and $281.9 million, respectively.

 

The following table identifies, as of September 30, 2019 and December 31, 2018, the Company’s investment securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months. At September 30, 2019, 43 of the Company’s 691 debt securities had been in an unrealized loss position for 12 or more months. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell the securities before recovery of their amortized cost, which may be maturity; accordingly, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2019. Further, the Company believes any deterioration in value of its current investment securities is attributable to changes in market interest rates and not credit quality of the issuer.

 

   

Less Than Twelve Months

   

Twelve Months or More

   

Total

 
   

Gross

           

Gross

           

Gross

         
   

Unrealized

           

Unrealized

           

Unrealized

         
   

Losses

   

Fair Value

   

Losses

   

Fair Value

   

Losses

   

Fair Value

 
   

(In Thousands)

 

September 30, 2019

                                               

U.S. Treasury securities

  $ -     $ -     $ (1 )   $ 2,998     $ (1 )   $ 2,998  

Government Agency securities

    (2 )     267       -