XML 21 R11.htm IDEA: XBRL DOCUMENT

Investment securities

3 Months Ended

Mar. 31, 2021

Investment securities

Investment securities

4. Investment securities:

The amortized cost and fair value of investment securities aggregated by investment category at March 31, 2021 and December 31, 2020 are summarized as follows:


					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
March 31, 2021		Cost			Gains			Losses			Value
Available-for-sale:
U.S. Treasury securities		$	18,481		$	344					$	18,825
U.S. government-sponsored enterprises			56,620			963						57,583
State and municipals:
Taxable			56,931			944		$	1,251			56,624
Tax-exempt			70,113			2,426			779			71,760
Residential mortgage-backed securities:
U.S. government agencies			3,061			125						3,186
U.S. government-sponsored enterprises			112,501			1,363			2,855			111,009
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises			12,600			677						13,277
Corporate debt securities			1,500			2			13			1,489
Total		$	331,807		$	6,844		$	4,898		$	333,753
Held-to-maturity:
Tax-exempt state and municipals		$	6,848		$	214					$	7,062
Residential mortgage-backed securities:
U.S. government agencies			18									18
U.S. government-sponsored enterprises			300			9						309
Total		$	7,166		$	223		$			$	7,389


					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

Equity Securities

At March 31, 2021, our equity security portfolio consisted of stock of one financial institution. At March 31, 2021 and December 31, 2020, we had $159 and $138 respectively, in equity securities recorded at fair value. At March 31, 2021, the fair value of our equity portfolio exceeded the cost basis by $5. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three months ended March 31, 2021 (in thousands):



For the Three Months Ended March 31,			2021			2020
Net gain (loss) recognized during the period on equity securities		$	21		$	(123)
Less: Net gain (loss) recognized during the period on equity securities sold during the period
Unrealized gain (loss) recognized during the reporting period on equity securities still held at the reporting date		$	21		$	(123)

Restricted Investment In Stock

Restricted investment in stock includes Federal Home Loan Bank (“FHLB”) stock with a carrying cost of $5,419 and $5,355 at March 31, 2021 and December 31, 2020, respectively, Atlantic Community Bankers Bank (“ACBB”) stock with a carrying cost of $42, and VISA Class B stock with a carrying cost of $0 at March 31, 2021 and December 31, 2020, which are included in other assets in the consolidated balance sheets. FHLB and ACBB stock was issued as a requirement to facilitate participation in borrowing and other banking services. The investment in FHLB stock may fluctuate, as it is based on the member bank’s use of FHLB’s services.

The Company owns 44,982 shares of Visa Class B stock, which was necessary to participate in Visa services in support of the Company’s credit card, debit card, and related payment programs (permissible activities under banking regulations) as a member institution. Following the resolution of Visa’s litigation, shares of Visa’s Class B stock will be converted to Visa Class A shares using a conversion factor (1.6228 as of March 31, 2021), which is periodically adjusted to reflect VISA’s ongoing litigation costs. There is a very limited market for this stock, as only current owners of Class

B shares are permitted to transact in Class B stock. Due to the lack of orderly trades and public information of such trades, Visa Class B stock has no readily determinable fair value.

These restricted investments are carried at cost and evaluated for other-than-temporary impairment (“OTTI”) periodically. As of March 31, 2021, there was no OTTI associated with these investments.

The maturity distribution of the fair value, which is the net carrying amount, of the debt securities classified as available-for-sale at March 31, 2021, is summarized as follows:


		Fair
March 31, 2021		Value
Within one year		$	39,394
After one but within five years			41,919
After five but within ten years			25,997
After ten years			95,819
			203,129
Mortgage-backed and other amortizing securities			130,624
Total		$	333,753

The maturity distribution of the amortized cost and fair value, of debt securities classified as held-to-maturity at March 31, 2021, is summarized as follows:


		Amortized			Fair
March 31, 2021		Cost			Value
Within one year		$	175		$	177
After five but within ten years			523			546
After ten years			6,150			6,339
			6,848			7,062
Mortgage-backed securities			318			327
Total		$	7,166		$	7,389

Securities with a carrying value of $174,711 and $165,982 at March 31, 2021 and December 31, 2020, 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 March 31, 2021 and December 31, 2020, 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 March 31, 2021 and December 31, 2020, 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
March 31, 2021		Value			Losses			Value			Losses			Value			Losses
State and municipals:
Taxable		$	28,025		$	1,251								$	28,025		$	1,251
Tax-exempt			30,795			779									30,795			779
Residential mortgage-backed securities:
U.S. government-sponsored enterprises			82,687			2,854		$	243		$	1			82,930			2,855
Corporate debt securities			987			13									987			13
Total		$	142,494		$	4,897		$	243		$	1		$	142,737		$	4,898


		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

Management, from a credit risk perspective, has taken action to identify and assess its COVID-19 related credit exposures based on asset class. No specific COVID-19 related credit impairment was identified within our investment securities portfolio, including our municipal securities, during the first quarter of 2021. The Company had fifteen mortgage-backed securities, forty-four tax-exempt municipals, twenty-eight taxable municipals and two corporate bonds that were in unrealized loss positions at March 31, 2021. Of these securities, two mortgage-backed securittes 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 known 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 March 31, 2021. There was no OTTI recognized for the three months ended March 31, 2021 and 2020.