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Investment securities

12 Months Ended

Dec. 31, 2021

Investment securities

Investment securities

3. Investment securities:

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


					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
December 31, 2021		Cost			Gains			Losses			Value
Available-for-sale:
U.S. Treasury securities		$	193,849		$	107		$	2,382		$	191,574
U.S. government-sponsored enterprises			33,435			343						33,778
State and municipals:
Taxable			69,066			994			1,082			68,978
Tax-exempt			96,412			2,452			614			98,250
Residential mortgage-backed securities:
U.S. government agencies			1,790			53						1,843
U.S. government-sponsored enterprises			109,018			939			2,925			107,032
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises			12,542			406						12,948
Corporate debt securities			3,000						82			2,918
Total		$	519,112		$	5,294		$	7,085		$	517,321
Held-to-maturity:
Tax-exempt state and municipals		$	11,476		$	126		$	56		$	11,546
Residential mortgage-backed securities:
U.S. government agencies			18,802						392			18,410
U.S. government-sponsored enterprises			40,935			3			448			40,490
Total		$	71,213		$	129		$	896		$	70,446


					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

The Company had net unrealized losses on available-for-sale securities of $1,415, net of deferred income taxes of $376 at December 31, 2021, and net unrealized gains on available-for-sale securities of $7,660 net of deferred income taxes of

$2,036, at December 31, 2020. 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. There were no sales of securities during 2021. The total securities portfolio grew in 2021 from utilizing a portion of low-yielding excess liquidity to purchase higher yielding bonds.

At December 31, 2021, our marketable 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, 2021 and December 31, 2020, we had $140 thousand and $138 thousand, respectively, in equity securities recorded at fair value. At December 31, 2021, the fair value of our equity portfolio was less than the cost basis by $13 thousand. The following is a summary of unrealized and realized gains and losses recognized in net income on equity marketable securities during 2021 and 2020.



Year Ended December 31,			2021			2020
Net gain (loss) recognized during the period on equity securities		$	2		$	(6)
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		$	2		$	(35)

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, 2021, is summarized as follows:


		Fair
December 31, 2021		Value
Within one year		$	28,887
After one but within five years			148,212
After five but within ten years			103,012
After ten years			112,347
			392,458
Mortgage-backed and other amortizing securities			124,863
Total		$	517,321

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, 2021, is summarized as follows:


		Amortized			Fair
December 31, 2021		Cost			Value
After five but within ten years		$	7,331		$	7,334
After ten years			4,145			4,212
			11,476			11,546
Mortgage-backed securities			59,737			58,900
Total		$	71,213		$	70,446

Securities with a carrying value of $203,580 and $165,982 at December 31, 2021 and 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 December 31, 2021 and 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 December 31, 2021 and 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
December 31, 2021		Value			Losses			Value			Losses			Value			Losses
U.S. Treasury securities		$	179,974		$	2,382								$	179,974		$	2,382
State and municipals:
Taxable			26,827			718		$	8,008		$	364			34,835			1,082
Tax-exempt			38,693			357			10,319			313			49,012			670
Residential mortgage-backed securities:
U.S. government agencies			18,398			392									18,398			392
U.S. government-sponsored enterprises			77,875			1,454			48,276			1,919			126,151			3,373
Corporate debt securities			2,449			51			470			31			2,919			82
Total		$	344,216		$	5,354		$	67,073		$	2,627		$	411,289		$	7,981


		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

The Company had 168 investment securities, consisting of 63 tax-exempt and 35 taxable state and municipal obligations, 42 U.S. Treasury bonds, 5 corporate bonds and 23 mortgage-backed securities that were in unrealized loss positions at December 31, 2021. Of these securities, seven mortgage-backed securities, one corporate bond, eight taxable municipals and eighteen tax-exempt municipals, were in a continuous unrealized loss position for twelve months or more. The increase in the number and balance of bonds in an unrealized position is due to recent increase in market rates. 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, 2021.

There was no OTTI recognized for each of the years in the three-year period ended December 31, 2021.

On October 8, 2021, Peoples Bank sold its remaining 44,982 shares of Class B common stock of Visa Inc. for $12.2 million. The Bank received 73,333 Class B shares of Visa Inc. as part of its membership interest in March 2008, and 28,351 shares were redeemed in connection with Visa’s initial public offering in 2008. The stock had no historical cost basis and was not considered to have a readily determinable value due to restrictions on the ability to sell.