Quarterly report pursuant to Section 13 or 15(d)

Investment Securities

v3.20.2
Investment Securities
9 Months Ended
Sep. 30, 2020
Investments Debt And Equity Securities [Abstract]  
Investment Securities

 

NOTE 4. INVESTMENT SECURITIES

The amortized cost, gross unrealized gains and losses and approximate fair values of securities available for sale are as follows:

 

 

 

Amortized

 

 

Unrealized

 

 

Fair

 

September 30, 2020

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

 

 

(Dollars in thousands)

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

5,499

 

 

$

18

 

 

 

 

 

$

5,517

 

State and municipal obligations

 

 

2,418

 

 

 

60

 

 

 

 

 

 

2,478

 

Residential mortgage-backed securities

 

 

79,824

 

 

 

104

 

 

 

468

 

 

 

79,460

 

Corporate Bonds

 

 

32,373

 

 

 

44

 

 

 

58

 

 

 

32,359

 

Total available for sale

 

$

120,114

 

 

$

226

 

 

$

526

 

 

$

119,814

 

 

 

 

Amortized

 

 

Unrealized

 

 

Fair

 

December 31, 2019

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

 

 

(Dollars in thousands)

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

60,315

 

 

$

71

 

 

$

15

 

 

$

60,371

 

State and municipal obligations

 

 

7,861

 

 

 

120

 

 

 

 

 

 

7,981

 

Residential mortgage-backed securities

 

 

27,922

 

 

 

664

 

 

 

1

 

 

 

28,585

 

Total available for sale

 

$

96,098

 

 

$

855

 

 

$

16

 

 

$

96,937

 

 

Taxable interest and dividends on investment securities were $443 thousand and $998 thousand for the three months ended September 30, 2020 and 2019, respectively. Tax-exempt interest and dividends on investment securities were $22 thousand and $146 thousand for the three months ended September 30, 2020 and 2019, respectively.  

 

Taxable interest and dividends on investment securities were $1.3 million and $3.2 million for the nine months ended September 30, 2020 and 2019, respectively.  Tax-exempt interest and dividends on investment securities were $98 thousand and $411 thousand for the nine months ended September 30, 2020 and 2019, respectively.  

     

There were $52.5 million and $90.6 million of securities pledged to collateralize public funds at September 30, 2020 and December 31, 2019, respectively.

The amortized cost and estimated fair value of securities available for sale, by contractual maturity, are as follows for the period presented:

 

 

 

Amortized

 

 

Fair

 

September 30, 2020

 

Cost

 

 

Value

 

 

 

(Dollars in thousands)

 

Available for sale:

 

 

 

 

 

 

 

 

Due in one year or less

 

$

 

 

$

 

Due after one year through five years

 

 

11,949

 

 

 

11,990

 

Due after five years through ten years

 

 

6,082

 

 

 

6,050

 

Due after ten years

 

 

22,259

 

 

 

22,314

 

Residential mortgage-backed securities

 

 

79,824

 

 

 

79,460

 

Total available for sale

 

$

120,114

 

 

$

119,814

 

 

For purposes of the maturity table, residential mortgage-backed securities, the principal of which are repaid periodically, are presented as a single amount. The expected lives of these securities will differ from contractual maturities because borrowers may have the right to prepay the underlying loans with or without prepayment penalties.

The following tables present the estimated fair values and gross unrealized losses on investment securities available for sale, aggregated by investment category and length of time individual securities have been in a continuous unrealized loss position as of the periods presented:

 

 

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

September 30, 2020

 

Fair

Value

 

 

Unrealized

Loss

 

 

Fair

Value

 

 

Unrealized

Loss

 

 

Fair

Value

 

 

Unrealized

Loss

 

 

 

(Dollars in thousands)

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

State and municipal obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage-backed securities

 

 

72,806

 

 

 

468

 

 

 

 

 

 

 

 

 

72,806

 

 

 

468

 

Corporate Bonds

 

 

10,948

 

 

 

58

 

 

 

 

 

 

 

 

 

 

 

10,948

 

 

 

58

 

Total available for sale

 

$

83,754

 

 

$

526

 

 

$

 

 

$

 

 

$

83,754

 

 

$

526

 

 

 

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

December 31, 2019

 

Fair

Value

 

 

Unrealized

Loss

 

 

Fair

Value

 

 

Unrealized

Loss

 

 

Fair

Value

 

 

Unrealized

Loss

 

 

 

(Dollars in thousands)

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

30,762

 

 

$

15

 

 

$

 

 

$

 

 

$

30,762

 

 

$

15

 

State and municipal obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage-backed securities

 

 

 

 

 

 

 

 

481

 

 

 

1

 

 

 

481

 

 

 

1

 

Total available for sale

 

$

30,762

 

 

$

15

 

 

$

481

 

 

$

1

 

 

$

31,243

 

 

$

16

 

 

At September 30, 2020, the Company’s securities portfolio consisted of 69 securities, 21 of which were in an unrealized loss position. None of the 21 securities in an unrealized loss position at September 30, 2020 were in an unrealized loss position for more than 12 months.

The Company monitors its investment securities for other-than-temporary-impairment (“OTTI”). Impairment is evaluated on an individual security basis considering numerous factors, and its relative significance. The Company has evaluated the nature of unrealized losses in the investment securities portfolio to determine if OTTI exists. The unrealized losses relate to changes in market interest rates and specific market conditions that do not represent credit-related impairments. Furthermore, the Company does not intend to sell nor is it more likely than not that it will be required to sell these investments before the recovery of their amortized cost basis. Management has completed an assessment of each security in an unrealized loss position for credit impairment and has determined that no individual security was other-than-temporarily impaired at September 30, 2020. The following describes the basis under which the Company has evaluated OTTI:

U.S. Treasury Securities, and Residential Mortgage-Backed Securities (“MBS”):

The unrealized losses associated with U.S. Treasury securities, U.S. Government agencies and residential MBS are primarily driven by changes in interest rates. These securities have either an explicit or implicit U.S. government guarantee. At September 30, 2020, the unrealized losses for these securities resulted primarily from changes in interest rates and spreads.

Sales proceeds from the sale of available for sale securities for the three and nine months ended September 30, 2020 were $34.0 million, which resulted in gross realized gains of $1.0 million.  There were no securities sold for the three months ended September 30, 2019.  Sales proceeds from the sale of available for sale securities for the nine months ended September 30, 2019 were $79.9 million which resulted in gross realized gains of $2.1 million.