Investment Securities and Other Investments

12 Months Ended

Dec. 31, 2020

Investment Securities and Other Investments

Note 4. Investment Securities and Other Investments

Investment securities available for sale are carried in the consolidated balance sheets at their fair value and investment securities held to maturity are carried in the consolidated balance sheets at their amortized cost. The amortized cost and fair values of investment securities at December 31, 2020 and December 31, 2019 were as follows:

	December 31, 2020
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale
State and municipal	$	14,069	$	258	$	68	$	14,259
U.S. Treasury and agencies		2,500		—		91		2,409
Mortgage backed securities		72,337		696		398		72,635
Corporate bonds		19,755		469		52		20,172
Total investment securities	$	108,661	$	1,423	$	609	$	109,475

	December 31, 2019
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale
U.S. Treasury and agencies	$	2,500	$	—	$	51	$	2,449
Mortgage backed securities		94,983		654		152		95,485
Corporate bonds		10,554		87		4		10,637
	$	108,037	$	741	$	207	$	108,571
Held to maturity
State and municipal	$	12,192	$	464	$	2	$	12,654
Total investment securities	$	120,229	$	1,205	$	209	$	121,225

The Company had no securities pledged with the Federal Reserve Bank of Richmond (“FRB”) for the years ended December 31, 2020 and 2019, respectively.

At December 31, 2020 and 2019, securities with a market value of $12.5 million and $12.0 million, respectively, were pledged to secure public deposits with the Treasury Board of the Commonwealth of Virginia.

At December 31, 2020 and 2019, securities with a market value of $29.4 million and $55.7 million, respectively, were pledged to secure the Bank’s line of credit with the Federal Home Loan Bank of Atlanta (“FHLB”).

The following table shows fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2020 and 2019. The reference point for determining when securities are in an unrealized loss position is period-end; therefore, it is possible that a security's market value exceeded its amortized cost on other days during the past twelve-month period.

	December 31, 2020
	Less than 12 Months					12 Months or Greater					Total
(Dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
State and municipal	$	3,111	$	(68	)	$	—	$	—		$	3,111	$	(68	)
U.S. Treasury and agencies		2,410		(91	)		—		—			2,410		(91	)
Mortgage backed securities		20,545		(65	)		8,592		(333	)		29,137		(398	)
Corporate bonds		3,242		(7	)		1,955		(45	)		5,197		(52	)
Total	$	29,308	$	(231	)	$	10,547	$	(378	)	$	39,855	$	(609	)

	December 31, 2019
	Less than 12 Months					12 Months or Greater					Total
(Dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
State and municipal	$	333	$	(2	)	$	—	$	—		$	333	$	(2	)
U.S. Treasury and agencies		—		—			1,949		(51	)		1,949		(51	)
Mortgage backed securities		27,901		(82	)		5,348		(70	)		33,249		(152	)
Corporate bonds		—		—			896		(4	)		896		(4	)
Total	$	28,234	$	(84	)	$	8,193	$	(125	)	$	36,427	$	(209	)

The amortized cost and fair value of securities at December 31, 2020, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	December 31, 2020
	Securities Available for Sale
(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	3,427	$	930
Due after one year through five years		6,305		6,963
Due after five years through ten years		32,003		34,057
Due after ten years		66,926		67,525
Total	$	108,661	$	109,475

Proceeds from sales, calls, and maturities of available-for-sale securities during 2020 and 2019 were $53.6 million and $44.4 million, resulting in a gain of $211 thousand and $451 thousand, respectively.

Held-to-maturity securities with book values of $1.2 million and $3.3 million, were either called or matured during 2020 and 2019, respectively, resulting in no gain or loss for either year. During 2020, $11 million of held-to-maturity securities were transferred to available-for-sale, as management’s intent changed with respect to the securities in light of potential liquidity needs.

Restricted equity investments consisted of stock in the FHLB (carrying basis $5.8 million and $6.0 million at December 31, 2020 and 2019, respectively), FRB stock (carrying basis of $2.2 million and $963 thousand at December 31, 2020 and 2019, respectively), the Company’s correspondent bank’s stock (carrying basis of $248 thousand at December 31, 2020 and 2019, respectively), and various other investments (carrying basis $3.0 million and $911 thousand at December 31, 2020 and 2019, respectively) for total restricted investments of $11.2 million and $8.1 million at December 31, 2020 and 2019, respectively.

Management evaluates securities for other-than-temporary impairment on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. No declines were deemed to be other-than-temporary as of December 31, 2020.