Investments

3 Months Ended

Mar. 31, 2021

Note 4 – Investments

Investment securities available for sale are carried at fair value in the Company’s consolidated balance sheets. The following tables present amortized cost and fair values of investment securities available for sale as of the dates stated.

	March 31, 2021
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
State and municipal	$	31,630	$	185	$	(339	)	$	31,476
U.S. Treasury and agencies		54,477		56		(807	)		53,726
Mortgage backed securities		159,239		440		(2,552	)		157,127
Corporate bonds		35,716		738		(49	)		36,405
Total investment securities	$	281,062	$	1,419	$	(3,747	)	$	278,734

	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

As of March 31, 2021 and December 31, 2020, securities with a market value of $11.9 million and $12.5 million, respectively, were pledged to secure public deposits with the Treasury Board of the Commonwealth of Virginia.

As of March 31, 2021 and December 31, 2020, securities with a market value of $23.6 million and $29.4 million, respectively, were pledged to secure the Bank’s borrowing facility with the FHLB.

As a result of the Bay Banks Merger, the Company assumed a limited number of reverse repurchase agreements, all of which had remaining contractual maturities that were overnight and continuous. Securities sold under repurchase agreements were $1.2 million as of March 31, 2021 and are included in liabilities on the Company’s consolidated balance sheets. The securities pledged to each agreement are reviewed daily and can be changed at the option of the Bank with minimal risk of loss due to fair value changes. Securities with a fair value of $3.0 million were pledged as collateral for securities sold under repurchase agreements as of March 31, 2021, and all securities pledged were state and municipal obligations.

The following table presents the amortized cost and fair value of securities available for sale by contractual maturity as of the date stated. 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.

	March 31, 2021
(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	20,100	$	19,986
Due after one year through five years		52,994		53,082
Due after five years through ten years		41,606		41,811
Due after ten years		166,362		163,855
Total	$	281,062	$	278,734

The following tables present a summary of unrealized losses and the length of time in a continuous loss position, by security type, as of the dates stated.

			March 31, 2021
			Less than 12 Months					12 Months or Greater					Total
(Dollars in thousands)	Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
State and municipal		38	$	17,258	$	(339	)	$	—	$	—		$	17,258	$	(339	)
U.S. Treasury and agencies		46		31,377		(807	)		—		—			31,377		(807	)
Mortgage backed securities		37		105,822		(2,381	)		10,182		(171	)		116,004		(2,552	)
Corporate bonds		4		5,005		(24	)		976		(25	)		5,981		(49	)
Total		125	$	159,462	$	(3,551	)	$	11,158	$	(196	)	$	170,620	$	(3,747	)

			December 31, 2020
			Less than 12 Months					12 Months or Greater					Total
(Dollars in thousands)	Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
State and municipal		6	$	3,111	$	(68	)	$	—	$	—		$	3,111	$	(68	)
U.S. Treasury and agencies		1		2,410		(91	)		—		—			2,410		(91	)
Mortgage backed securities		22		20,545		(65	)		8,592		(333	)		29,137		(398	)
Corporate bonds		7		3,242		(7	)		1,955		(45	)		5,197		(52	)
Total		36	$	29,308	$	(231	)	$	10,547	$	(378	)	$	39,855	$	(609	)

The Company reviews for other-than-temporary impairment of its investment securities portfolio at least quarterly. As of March 31, 2021 and December 31, 2020, only investment grade securities were in an unrealized loss position. Investment securities with unrealized losses are a result of pricing changes due to recent and negative conditions in the current market environment and not as a result of permanent credit impairment. Contractual cash flows for the agency mortgage-backed securities are guaranteed and/or funded by the U.S. government. Municipal securities show no indication that the contractual cash flows will not be received when due. The Company does not intend to sell nor does it believe that it will be required to sell any of its temporarily impaired securities prior to the recovery of the amortized cost.

Restricted equity investments consisted of stock in the FHLB (carrying value of $8.2 million and $5.8 million as of March 31, 2021 and December 31, 2020, respectively), FRB stock (carrying value of $4.9 million and $2.2 million as of March 31, 2021 and December 31, 2020, respectively), and stock in the Company’s correspondent bank (carrying value of $468 thousand and $248 thousand as of March 31, 2021 and December 31, 2020, respectively). Restricted equity investments are carried at cost. The Company also has various other equity investments totaling $1.2 million and $3.0 million as of March 31, 2021 and December 31, 2020, respectively, which are marked to market through the consolidated income statement each reporting period.