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Investment securities

12 Months Ended

Dec. 31, 2020

Investment securities

Investment securities

3. Investment securities:

The amortized cost and fair value of investment securities aggregated by investment category at December 31, 2020 and 2019 are summarized as follows:


					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
December 31, 2020		Cost			Gains			Losses			Value
Available-for-sale:
U.S. Treasury securities		$	18,478		$	427					$	18,905
U.S. government-sponsored enterprises			63,834			1,354						65,188
State and municipals:
Taxable			53,297			2,099		$	30			55,366
Tax-exempt			53,977			3,054			37			56,994
Residential mortgage-backed securities:
U.S. government agencies			3,553			154						3,707
U.S. government-sponsored enterprises			79,457			1,930			136			81,251
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises			12,619			881						13,500
Corporate debt securities			1,000									1,000
Total		$	286,215		$	9,899		$	203		$	295,911
Held-to-maturity:
Tax-exempt state and municipals		$	6,849		$	275		$			$	7,124
Residential mortgage-backed securities:
U.S. government agencies			21									21
U.S. government-sponsored enterprises			355			13						368
Total		$	7,225		$	288		$			$	7,513


					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
December 31, 2019		Cost			Gains			Losses			Value
Available-for-sale:
U.S. Treasury securities		$	23,966		$	162					$	24,128
U.S. government-sponsored enterprises			87,156			181		$	227			87,110
State and municipals:
Taxable			35,418			295			815			34,898
Tax-exempt			59,127			1,056			20			60,163
Residential mortgage-backed securities:
U.S. government agencies			8,368			112			10			8,470
U.S. government-sponsored enterprises			101,914			1,011			77			102,848
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises			12,694			171			4			12,861
Total		$	328,643		$	2,988		$	1,153		$	330,478
Held-to-maturity:
Tax-exempt state and municipals		$	6,852		$	208		$			$	7,060
Residential mortgage-backed securities:
U.S. government agencies			31									31
U.S. government-sponsored enterprises			773			25						798
Total		$	7,656		$	233		$			$	7,889

The Company had net unrealized gains on available-for-sale securities of $7,660, net of deferred income taxes of $2,036 at December 31, 2020, and net unrealized gains on available-for-sale securities of $1,450, net of deferred income taxes of $385, at December 31, 2019. During 2020, the Company sold a pool of low-yielding short-term municipal bonds and

two mortgage-backed securities and received proceeds totaling $64,841. Gross gains of $923 and gross losses of $5 were realized on the sale of investment securities in 2020. During 2019, the Company sold a pool of municipal bonds and received proceeds totaling $9,677 and realized gross gains of $66 and gross losses of $43.

At December 31, 2020, our equity security portfolio consisted of stock of one financial institution. During 2020, the Company sold its entire stock position in one other equity holding and received proceeds of $279 and recognized a gain of $29. At December 31, 2020 and December 31, 2019, we had $138 thousand and $423 thousand, respectively, in equity securities recorded at fair value. Prior to January 1, 2018, equity securities were stated at fair value with unrealized gains and losses reported as a separate component of Accumulated Other Comprehensive Income (“AOCI”), net of tax. At December 31, 2018, net unrealized gains of $3 thousand had been recognized in AOCI. On January 1, 2018, these unrealized gains, net of income tax were reclassified out of AOCI and into retained earnings with subsequent changes in fair value being recognized in net income. At December 31, 2020, the fair value of our equity portfolio was less than the cost basis by $15 thousand. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during 2020 and 2019.



Year Ended December 31,			2020			2019
Net gain (loss) recognized during the period on equity securities		$	(6)		$	132
Less: Net gain (loss) recognized during the period on equity securities sold during the period			29
Unrealized gain (loss) recognized during the reporting period on equity securities still held at the reporting date		$	(35)		$	132

The maturity distribution of the fair value, which is the net carrying amount, of the debt securities classified as available-for-sale at December 31, 2020, is summarized as follows:


		Fair
December 31, 2020		Value
Within one year		$	37,351
After one but within five years			49,444
After five but within ten years			22,799
After ten years			84,357
			193,951
Mortgage-backed and other amortizing securities			101,960
Total		$	295,911

Expected maturities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

The maturity distribution of the amortized cost and fair value, of debt securities classified as held-to-maturity at December 31, 2020, is summarized as follows:


		Amortized			Fair
December 31, 2020		Cost			Value
Within one year		$	175		$	178
After five but within ten years			324			344
After ten years			6,350			6,602
			6,849			7,124
Mortgage-backed securities			376			389
Total		$	7,225		$	7,513

Securities with a carrying value of $165,982 and $157,047 at December 31, 2020 and 2019, respectively, were pledged to secure public deposits and certain other deposits as required or permitted by law.

Securities and short-term investment activities are conducted with a diverse group of government entities, corporations and state and local municipalities. The counterparty’s creditworthiness and type of collateral is evaluated on a case-by-case basis. At December 31, 2020 and 2019, there were no significant concentrations of credit risk from any one issuer, with the exception of U.S. government agencies and sponsored enterprises that exceeded 10.0 percent of stockholders’ equity.

The fair value and gross unrealized losses of investment securities with unrealized losses for which an OTTI has not been recognized at December 31, 2020 and 2019, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, are summarized as follows:


		Less Than 12 Months						12 Months or More						Total
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
December 31, 2020		Value			Losses			Value			Losses			Value			Losses
State and municipals:
Taxable		$	9,246		$	30		$			$			$	9,246		$	30
Tax-exempt			6,786			37									6,786			37
Residential mortgage-backed securities:
U.S. government-sponsored enterprises			11,553			135			284			1			11,837			136
Total		$	27,585		$	202		$	284		$	1		$	27,869		$	203


		Less Than 12 Months						12 Months or More						Total
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
December 31, 2019		Value			Losses			Value			Losses			Value			Losses
U.S. government-sponsored enterprises		$	13,695		$	149		$	36,070		$	78		$	49,765		$	227
State and municipals:
Taxable			23,929			815									23,929			815
Tax-exempt			2,684			19			1,098			1			3,782			20
Residential mortgage-backed securities:
U.S. government agencies			992			1			2,362			9			3,354			10
U.S. government-sponsored enterprises			36,939			51			3,751			30			40,690			81
Total		$	78,239		$	1,035		$	43,281		$	118		$	121,520		$	1,153

The Company had 26 investment securities, consisting of 12 tax-exempt and 8 taxable state and municipal obligations, and 6 mortgage-backed securities that were in unrealized loss positions at December 31, 2020. Of these securities, two mortgage-backed securities were in a continuous unrealized loss position for twelve months or more. Management does not consider the unrealized losses on the debt securities, as a result of changes in interest rates, to be OTTI based on historical evidence that indicates the cost of these securities is recoverable within a reasonable period of time in relation to normal cyclical changes in the market rates of interest. Moreover, because there has been no material change in the credit quality of the issuers or other events or circumstances that may cause a significant adverse impact on the fair value of these securities, and management does not intend to sell these securities and it is unlikely that the Company will be required to sell these securities before recovery of their amortized cost basis, which may be maturity, the Company does not consider the unrealized losses to be OTTI at December 31, 2020.

There was no OTTI recognized for each of the years in the three-year period ended December 31, 2020.

Other assets include the Company’s investment in Visa Class B stock. The Company’s ownership includes shares acquired at no cost related to the Company’s prior ownership in Visa's network while Visa operated as a cooperative. The Company holds 44,982 shares of Visa Class B stock which, following resolution of Visa litigation, will be converted to Visa Class A shares (the conversion rate as of December 31, 2020 is 1.6228 shares of Class A stock for each share of Class B stock) for a total of 72,997 shares of Visa Class A stock.

There is a very limited market for this stock, as only current owners of Class B shares are permitted to transact in Class B. Due to the lack of orderly trades and public information of such trades, Visa Class B stock has no readily determinable fair value and is carried at cost.