Annual report pursuant to Section 13 and 15(d)

Investment Securities

v3.20.4
Investment Securities
12 Months Ended
Dec. 31, 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 debt securities available for sale are as follows:

 

 

 

Amortized

 

 

Unrealized

 

 

Fair

 

December 31, 2020

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

 

 

(Dollars in thousands)

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State and municipal obligations

 

$

36,258

 

 

$

927

 

 

$

-

 

 

$

37,185

 

Residential mortgage-backed securities

 

 

132,130

 

 

 

278

 

 

 

267

 

 

 

132,142

 

Corporate bonds and other debt securities

 

 

42,768

 

 

 

433

 

 

 

109

 

 

 

43,093

 

Total available for sale

 

$

211,156

 

 

$

1,638

 

 

$

376

 

 

$

212,420

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Fair

 

December 31, 2019

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

 

 

(Dollars in thousands)

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

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

 

There were $91.5 million and $90.6 million in securities pledged at December 31, 2020 and 2019, respectively to collateralize public funds.  

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

 

 

 

Amortized

 

 

Fair

 

December 31, 2020

 

Cost

 

 

Value

 

 

 

(Dollars in thousands)

 

Available for sale:

 

 

 

 

 

 

 

 

Due in one year or less

 

$

1,970

 

 

$

1,977

 

Due after one year through five years

 

 

4,483

 

 

 

4,509

 

Due after five years through ten years

 

 

36,031

 

 

 

36,385

 

Due after ten years

 

 

36,542

 

 

 

37,407

 

Residential mortgage-backed securities

 

 

132,130

 

 

 

132,142

 

Total available for sale

 

$

211,156

 

 

$

212,420

 

 

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

 

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

December 31, 2020

 

Value

 

 

Loss

 

 

Value

 

 

Loss

 

 

Value

 

 

Loss

 

 

 

(Dollars in thousands)

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage-backed securities

 

$

53,598

 

 

$

267

 

 

$

 

 

$

 

 

$

53,598

 

 

$

267

 

Corporate bonds and other debt securities

 

 

17,087

 

 

 

109

 

 

 

 

 

 

 

 

 

17,087

 

 

 

109

 

Total available for sale

 

$

70,685

 

 

$

376

 

 

$

 

 

$

 

 

$

70,685

 

 

$

376

 

 

 

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

December 31, 2019

 

Value

 

 

Loss

 

 

Value

 

 

Loss

 

 

Value

 

 

Loss

 

 

 

(Dollars in thousands)

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

30,762

 

 

$

15

 

 

$

 

 

$

 

 

$

30,762

 

 

$

15

 

U.S. Government agencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State and municipal obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage-backed securities

 

 

 

 

 

 

 

 

481

 

 

 

1

 

 

 

481

 

 

 

1

 

Corporate bonds and other debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total available for sale

 

$

30,762

 

 

$

15

 

 

$

481

 

 

$

1

 

 

$

31,243

 

 

$

16

 

 

At December 31, 2020, the Company’s security portfolio consisted of 97 securities, of which 24 were in an unrealized loss position.  The unrealized losses for these securities resulted primarily from changes in interest rates and spreads.

The Company monitors its investment securities for 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 December 31, 2020. The following describes the basis under which the Company has evaluated OTTI:

Residential Mortgage-Backed Securities (“MBS”):

The unrealized losses associated with residential MBS are primarily driven by changes in interest rates.

Corporate Bonds and Other Debt Securities:

The unrealized losses associated with corporate bonds and other debt securities are primarily driven by changes in interest rates.

 

The Company sold 46 securities during the year ended December 31, 2020 and 216 securities during the year ended December 31, 2019. There were no securities sold for the year ended December 31, 2018. Sale proceeds and gross realized gains and losses on the sale of securities available for sale are shown below. The cost of securities sold is based on the specific identification method.

 

 

 

For the Years Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

 

 

(Dollars in thousands)

 

Sale proceeds from sale of available for sale securities

 

$

34,023

 

 

$

171,260

 

 

$

 

Gross realized gains

 

 

1,031

 

 

 

4,637

 

 

 

 

Gross realized losses

 

 

 

 

 

(55

)

 

 

 

Net realized gains (losses)

 

$

1,031

 

 

$

4,582

 

 

$

 

 

Equity investments at fair value consist of an investment in the CRA Qualified Investment Fund.  At December 31, 2020, the fair value of equity securities totalled $24 million. Subsequent changes in fair value are recognized in other noninterest income.  There were no fair value changes subsequent to purchase and through the year ended December 31, 2020.

  

Taxable interest and dividends on investment securities were $2.1 million, $4.6 million and $1.4 million for the years ended December 31, 2020, 2019 and 2018, respectively. Tax-exempt interest on investment securities was $193 thousand, $541 thousand and $78 thousand for the years ended December 31, 2020, 2019 and 2018, respectively.