Quarterly report pursuant to Section 13 or 15(d)

Investment Securities

v3.21.1
Investment Securities
3 Months Ended
Mar. 31, 2021
Investments Debt And Equity Securities [Abstract]  
Investment Securities

 

NOTE 3. 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

 

March 31, 2021

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

 

 

(Dollars in thousands)

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

$

-

 

 

$

-

 

 

 

 

 

$

-

 

State and municipal obligations

 

 

34,541

 

 

 

71

 

 

 

203

 

 

 

34,409

 

Residential mortgage-backed securities

 

 

370,937

 

 

 

5

 

 

 

6,233

 

 

 

364,709

 

Corporate Bonds

 

 

42,745

 

 

 

848

 

 

 

135

 

 

 

43,458

 

Total available for sale

 

$

448,223

 

 

$

924

 

 

$

6,571

 

 

$

442,576

 

 

 

 

 

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

 

 

Taxable interest and dividends on investment securities were $957 thousand and $465 thousand for the three months ended March 31, 2021 and 2020, respectively. Tax-exempt interest and dividends on investment securities were $158 thousand and $39 thousand for the three months ended March 31, 2021 and 2020, respectively.  

       

There were $138.6 million and $91.5 million of securities pledged to collateralize public funds at March 31, 2021 and December 31, 2020, 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

 

March 31, 2021

 

Cost

 

 

Value

 

 

 

(Dollars in thousands)

 

Available for sale:

 

 

 

 

 

 

 

 

Due in one year or less

 

$

317

 

 

$

318

 

Due after one year through five years

 

 

9,471

 

 

 

9,555

 

Due after five years through ten years

 

 

31,021

 

 

 

31,687

 

Due after ten years

 

 

36,477

 

 

 

36,307

 

Residential mortgage-backed securities

 

 

370,937

 

 

 

364,709

 

Total available for sale

 

$

448,223

 

 

$

442,576

 

 

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

 

March 31, 2021

 

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

 

 

20,837

 

 

 

203

 

 

 

 

 

 

 

 

 

20,837

 

 

 

203

 

Residential mortgage-backed securities

 

 

332,775

 

 

 

6,233

 

 

 

 

 

 

 

 

 

332,775

 

 

 

6,233

 

Corporate Bonds

 

 

3,637

 

 

 

135

 

 

 

 

 

 

 

 

 

3,637

 

 

 

135

 

Total available for sale

 

$

357,249

 

 

$

6,571

 

 

$

 

 

$

 

 

$

357,249

 

 

$

6,571

 

 

 

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

December 31, 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

 

 

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

 

 

 

At March 31, 2021, the Company’s securities portfolio consisted of 108 securities, 74 of which were in an unrealized loss position. None of the 74 securities in an unrealized loss position at March 31, 2021 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 March 31, 2021. 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, and residential MBS are primarily driven by changes in interest rates. These securities have either an explicit or implicit U.S. government guarantee. At March 31, 2021, 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 months ended March 31, 2021 were $6.9 million, which resulted in gross realized gains of $5 thousand.  There were no securities sold for the three months ended March 31, 2020.  

 

Equity Investments:

 

Equity investments at fair value consist of an investment in the CCM Community Impact Bond Fund. At March 31, 2021 and December 31, 2020, the fair value of equity securities totaled $23.7 million and $24.0 million, respectively. Subsequent changes in fair value are recognized in other noninterest income.  For the three months ended March 31, 2021 a loss of $400 thousand was included in other noninterest income. There were no fair value changes for the three months ended March 31, 2020.