INVESTMENT SECURITIES

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

At December 31, 2021 and 2020, all investment securities were classified as AFS. The following table summarizes amortized cost and fair value of AFS securities, and the corresponding amounts of gross unrealized gains and losses recognized in AOCI at December 31, 2021 and 2020.


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2021
U.S. Treasury securities	$	20,084	$	—	$	382	$	19,702


States and political subdivisions	185,437		8,606		673		193,370
GSE residential MBSs	41,260		44		578		40,726
GSE residential CMOs	66,430		436		944		65,922
Non-agency CMOs	30,676		—		978		29,698



Asset-backed	122,520		401		300		122,621
Other	399		—		—		399
Totals	$	466,806	$	9,487	$	3,855	$	472,438
December 31, 2020



States and political subdivisions	$	104,704	$	9,091	$	1,125	$	112,670
GSE residential MBSs	4,197		96		0		4,293

GSE residential CMOs	56,856		2,226		1,071		58,011
Non-agency CMOs	16,505		413		—		16,918


Private label commercial CMOs	63,941		57		1,762		62,236
Asset-backed	214,425		171		2,630		211,966
Other	371		—		—		371
Totals	$	460,999	$	12,054	$	6,588	$	466,465

The following table summarizes investment securities with unrealized losses at December 31, 2021 and 2020, aggregated by major security type and length of time in a continuous unrealized loss position.


	Less Than 12 Months					12 Months or More					Total
	# of Securities	Fair Value		Unrealized Losses		# of Securities	Fair Value		Unrealized Losses		# of Securities	Fair Value		Unrealized Losses
December 31, 2021
U.S. Treasury securities	3	$	19,702	$	382	—	$	—	$	—	3	$	19,702	$	382


States and political subdivisions	12	45,522		673		—	—		—		12	45,522		673
GSE residential MBSs	9	37,899		578		—	—		—		9	37,899		578
GSE residential CMOs	7	41,163		944		—	—		—		7	41,163		944
Non-agency CMOs	3	24,661		978		—	—		—		3	24,661		978



Asset-backed	3	21,245		138		3	34,180		162		6	55,425		300
Totals	37	$	190,192	$	3,693	3	$	34,180	$	162	40	$	224,372	$	3,855
December 31, 2020



States and political subdivisions	1	$	9,079	$	1,125	—	$	—	$	—	1	$	9,079	$	1,125

GSE residential CMOs	3	23,954		1,071		—	—		—		3	23,954		1,071



Private label commercial CMOs	1	4,314		685		10	42,403		1,077		11	46,717		1,762
Asset-backed	2	16,921		12		15	183,161		2,618		17	200,082		2,630
Totals	7	$	54,268	$	2,893	25	$	225,564	$	3,695	32	$	279,832	$	6,588

The Company determines whether unrealized losses are temporary in nature in accordance with FASB ASC 320-10, Investments - Overall, (“FASB ASC 320-10”) and FASB ASC 325-40, Investments – Beneficial Interests in Securitized Financial Assets, when applicable. The evaluation is based upon factors such as the creditworthiness of the underlying borrowers, performance of the underlying collateral, if applicable, and the level of credit support in the security structure. Management also evaluates other factors and circumstances that may be indicative of an OTTI condition. This includes, but is not limited to, an evaluation of the type of security, length of time and extent to which the fair value has been less than cost and near-term prospects of the issuer.

FASB ASC 320-10 requires the Company to assess if an OTTI exists by considering whether the Company has the intent to sell the security or it is more likely than not that it will be required to sell the security before recovery. If either of these situations applies, the guidance requires the Company to record an OTTI charge to earnings on debt securities for the difference between the amortized cost basis of the security and the fair value of the security. If neither of these situations applies, the Company is required to assess whether it is expected to recover the entire amortized cost basis of the security. If the Company is not expected to recover the entire amortized cost basis of the security, the guidance requires the Company to bifurcate the identified OTTI into a credit loss component and a component representing loss related to other factors. A discount rate is applied which equals the effective yield of the security. The difference between the present value of the expected flows and the amortized book value is considered a credit loss, which would be recorded through earnings as an OTTI charge. When a market price is not readily available, the market value of the security is determined using the same expected cash flows; the discount rate is a rate the Company determines from the open market and other sources as appropriate for the security. The difference between the market value and the present value of cash flows expected to be collected is recognized in accumulated other comprehensive loss on the consolidated statements of financial condition.

As of December 31, 2021, the Company had no cumulative OTTI. There were no OTTI charges recognized in earnings as a result of credit losses on investments in the years ended December 31, 2021, 2020 and 2019. During 2020, unrealized losses were substantially higher due to market uncertainty brought about by the COVID-19 pandemic. The sudden and desperate need for liquidity from many institutional pools of capital, combined with the global economic implications of the COVID-19 pandemic, caused significant widening of spreads. Market conditions improved in the second half of 2020 and into 2021 as the uncertainty dissipated with economies re-opening and the distribution of vaccines.

U.S. Treasury Securities. The unrealized losses presented in the table above have been caused by an increase in rates from the time these securities were purchased. Management considers the full faith and credit of the U.S. government in determining whether a security is OTTI. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at December 31, 2021. The Company did not hold U.S. Treasury Securities at December 31, 2020.

States and Political Subdivisions. The unrealized losses presented in the table above have been caused by a widening of spreads and/or a rise in interest rates from the time these securities were purchased. Management considers the investment rating, the state of the issuer of the security and other credit support in determining whether the security is OTTI. As of December 31, 2021 and 2020, management concluded that an OTTI did not exist on any of the aforementioned securities based upon its assessment. Management also concluded that it does not intend to sell nor will it be required to sell the securities, before their recovery, which may be maturity, and management expects to recover the entire amortized cost basis of these securities.

GSE Residential CMOs and GSE Residential MBS. The unrealized losses presented in the table above have been caused by a widening of spreads and/or a rise in interest rates from the time these securities were purchased. The contractual terms of these securities do not permit the issuer to settle the securities at a price less than its par value basis. As of December 31, 2021 and 2020, management concluded that an OTTI did not exist on any of the aforementioned securities based upon its assessment. Management also concluded that it does not intend to sell nor will it be required to sell the securities, before their recovery, which may be maturity, and management expects to recover the entire amortized cost basis of these securities.

Non-agency CMOs. The unrealized losses presented in the table above were caused by a widening of spreads and/or a rise in interest rates from the time the securities were purchased. As of December 31, 2021, management concluded that an OTTI did not exist on any of the aforementioned securities based upon its assessment. Management also concluded that it does not intend to sell nor will it be required to sell the securities, before their recovery, which may be maturity, and management expects to recover the entire amortized cost basis of these securities. The Company did not hold non-agency CMOs at December 31, 2020.

Private Label Commercial CMOs and Asset-backed. The unrealized losses presented in the table above have been caused by a widening of spreads from the time the securities were purchased. Management considers the investment rating and other credit support in determining whether a security is other-than-temporarily impaired. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be OTTI at December 31, 2021 and 2020. The Company did not hold private label commercial CMOs at December 31, 2021.

The following table summarizes amortized cost and fair value of investment securities by contractual maturity at December 31, 2021. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.


	Amortized Cost		Fair Value
Due in one year or less	$	—	$	—
Due after one year through five years	3,382		3,718
Due after five years through ten years	78,759		79,801
Due after ten years	123,779		129,952
CMOs and MBSs	138,366		136,346
Asset-backed	122,520		122,621
	$	466,806	$	472,438

The following table summarizes proceeds from sales of investment securities and gross gains and gross losses for the years ended December 31, 2021, 2020 and 2019.


	2021		2020		2019
Proceeds from sale of investment securities	$	149,038	$	—	$	199,429
Gross gains	1,847		—		4,974
Gross losses	1,209		16		225

During the year ended December 31, 2021, net investment security gains of $638 thousand were recorded compared to a net loss of $16 thousand recorded to adjust an equity security to market value for year ended December 31, 2020 and net investment security gains of $4.7 million for year ended December 31, 2019. Investment securities with a fair value of $295.6 million and $398.7 million at December 31, 2021 and 2020, respectively, were pledged to secure public funds and for other purposes as required or permitted by law.