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Investment securities

9 Months Ended

Sep. 30, 2022

Investment securities

Investment securities

4. Investment securities:

The amortized cost and fair value of investment securities aggregated by investment category at September 30, 2022 and December 31, 2021 are summarized as follows:


					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
September 30, 2022		Cost			Gains			Losses			Value
Available-for-sale:
U.S. Treasury securities		$	247,812		$			$	23,476		$	224,336
U.S. government-sponsored enterprises			16,976						625			16,351
State and municipals:
Taxable			69,913			1			13,680			56,234
Tax-exempt			100,078			1			15,493			84,586
Residential mortgage-backed securities:
U.S. government agencies			1,130						39			1,091
U.S. government-sponsored enterprises			100,020						20,312			79,708
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises			12,243						564			11,679
Corporate debt securities			4,000						395			3,605
Total		$	552,172		$	2		$	74,584		$	477,590
Held-to-maturity:
Tax-exempt state and municipals		$	11,247		$			$	1,286		$	9,961
Residential mortgage-backed securities:
U.S. government agencies			17,732						2,679			15,053
U.S. government-sponsored enterprises			63,792						10,294			53,498
Total		$	92,771		$			$	14,259		$	78,512


					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

Restricted Investment In Stock

Restricted investment in stock includes Federal Home Loan Bank (“FHLB”) stock with a carrying cost of $4.5 million and $4.0 million at September 30, 2022 and December 31, 2021, respectively, and Atlantic Community Bankers Bank (“ACBB”) stock with a carrying cost of $42 thousand at September 30, 2022 and December 31, 2021, respectively, 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.

These restricted investments are carried at cost and evaluated for other-than-temporary impairment (“OTTI”) quarterly. As of September 30, 2022, 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 September 30, 2022, is summarized as follows:


		Fair
September 30, 2022		Value
Within one year		$	18,608
After one but within five years			204,991
After five but within ten years			74,710
After ten years			84,516
			382,825
Mortgage-backed and other amortizing securities			94,765
Total		$	477,590

The maturity distribution of the amortized cost and fair value, of debt securities classified as held-to-maturity at September 30, 2022, is summarized as follows:


		Amortized			Fair
September 30, 2022		Cost			Value
After five but within ten years		$	8,294		$	7,410
After ten years			2,953			2,551
			11,247			9,961
Mortgage-backed securities			81,524			68,551
Total		$	92,771		$	78,512

Securities with a carrying value of $165.1 million and $203.6 million at September 30, 2022 and December 31, 2021, 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 September 30, 2022 and December 31, 2021, there were no significant concentrations of credit risk from any one issuer, with the exception of U.S. government agencies and sponsored enterprises, which 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 September 30, 2022 and December 31, 2021, 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 Greater								Total
		Number of								Number of								Number of
		Securities in a		Fair			Unrealized			Securities in a		Fair			Unrealized			Securities in a		Fair			Unrealized
September 30, 2022		Loss Position		Value			Losses			Loss Position		Value			Losses			Loss Position		Value			Losses
U.S. Treasury securities		16		$	83,156		$	5,372		37		$	141,180		$	18,104		53		$	224,336		$	23,476
U.S. government-sponsored enterprises		5			16,351			625										5			16,351			625
State and municipals:
Taxable		32			27,779			4,951		34			26,547			8,729		66			54,326			13,680
Tax-exempt		74			57,580			7,835		58			35,886			8,944		132			93,466			16,779
Residential mortgage-backed securities:
U.S. government agencies		6			1,098			39		3			15,046			2,679		9			16,144			2,718
U.S. government-sponsored enterprises		26			54,953			9,141		16			78,254			21,465		42			133,207			30,606
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises		4			11,679			564										4			11,679			564
Corporate debt securities		1			947			53		5			2,658			342		6			3,605			395
Total		164		$	253,543		$	28,580		153		$	299,571		$	60,263		317		$	553,114		$	88,843


				Less Than 12 Months								12 Months or Greater								Total
		Number of								Number of								Number of
		Securities in a		Fair			Unrealized			Securities in a		Fair			Unrealized			Securities in a		Fair			Unrealized
December 31, 2021		Loss Position		Value			Losses			Loss Position		Value			Losses			Loss Position		Value			Losses
U.S. Treasury securities		42		$	179,974		$	2,382				$			$			42		$	179,974		$	2,382
State and municipals:
Taxable		27			26,827			718		8			8,008			364		35			34,835			1,082
Tax-exempt		61			38,693			357		2			10,319			313		63			49,012			670
Residential mortgage-backed securities:
U.S. government agencies		3			18,398			392										3			18,398			392
U.S. government-sponsored enterprises		13			77,875			1,454		7			48,276			1,919		20			126,151			3,373
Corporate debt securities		4			2,449			51		1			470			31		5			2,919			82
Total		150		$	344,216		$	5,354		18		$	67,073		$	2,627		168		$	411,289		$	7,981

The unrealized losses on securities are primarily due to the changes in market interest rates subsequent to purchase. The Company did not consider these securities to have OTTI at September 30, 2022 or December 31, 2021 since the decline in market value was attributable to changes in interest rates and not to changes in credit quality. In addition, the Company does not intend to sell and does not believe that it is more likely than not that it will be required to sell these investments until there is a full recovery of the unrealized loss, which may be at maturity. As a result, no impairment loss was recognized during the nine months ended September 30, 2022 or for the year ended December 31, 2021.