Investments

3 Months Ended

Mar. 31, 2022

Note 3 – Investments

Investment securities available for sale are carried at fair value in the 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, 2022
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
State and municipal	$	58,962	$	5	$	(4,041	)	$	54,926
U.S. Treasury and agencies		75,402		—		(5,683	)		69,719
Mortgage backed securities		225,163		78		(18,106	)		207,135
Corporate bonds		43,679		572		(547	)		43,704
Total investment securities	$	403,206	$	655	$	(28,377	)	$	375,484


	December 31, 2021
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
State and municipal	$	51,341	$	302	$	(530	)	$	51,113
U.S. Treasury and agencies		65,680		—		(1,614	)		64,066
Mortgage backed securities		222,968		403		(4,261	)		219,110
Corporate bonds		38,752		808		(317	)		39,243
Total investment securities	$	378,741	$	1,513	$	(6,722	)	$	373,532

As of March 31, 2022 and December 31, 2021, no securities and securities with a fair value of $8.7 million were pledged to secure public deposits with the Treasury Board of the Commonwealth of Virginia.

As of March 31, 2022 and December 31, 2021, securities with a fair value of $20.0 million and $23.1 million, respectively, were pledged to secure the Bank’s line of credit with the Federal Home Loan Bank of Atlanta ("FHLB").

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 may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	March 31, 2022
(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	9,412	$	9,320
Due after one year through five years		36,249		34,710
Due after five years through ten years		133,649		126,631
Due after ten years		223,896		204,823
Total	$	403,206	$	375,484

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


			March 31, 2022
			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		75	$	44,827	$	(3,611	)	$	4,986	$	(430	)	$	49,813	$	(4,041	)
U.S. Treasury and agencies		28		51,162		(4,376	)		10,193		(1,307	)		61,355		(5,683	)
Mortgage backed securities		65		158,560		(13,607	)		42,108		(4,499	)		200,668		(18,106	)
Corporate bonds		16		15,119		(485	)		1,938		(62	)		17,057		(547	)
Total		184	$	269,668	$	(22,079	)	$	59,225	$	(6,298	)	$	328,893	$	(28,377	)


			December 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	$	27,905	$	(530	)	$	—	$	—		$	27,905	$	(530	)
U.S. Treasury and agencies		22		64,067		(1,614	)		—		—			64,067		(1,614	)
Mortgage backed securities		54		186,924		(4,257	)		543		(4	)		187,467		(4,261	)
Corporate bonds		11		6,770		(313	)		996		(4	)		7,766		(317	)
Total		125	$	285,666	$	(6,714	)	$	1,539	$	(8	)	$	287,205	$	(6,722	)

The Company reviews for other-than-temporary impairment of its investment securities portfolio at least quarterly. At March 31, 2022 and December 31, 2021, with the exception of one security, all securities in an unrealized loss position were of investment grade. In addition, the amount of unrealized loss for the security was not significant. Investment securities with unrealized losses are generally a result of pricing changes due to recent changes in the interest rate environment and not as a result of permanent credit impairment. Contractual cash flows for the 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 $1.8 million and $1.7 million as of March 31, 2022 and December 31, 2021, respectively), stock in the Federal Reserve Bank of Richmond ("FRB") (carrying value of $6.1 million at both March 31, 2022 and December 31, 2021), and stock in the Bank’s correspondent bank (carrying value of $468 thousand at both March 31, 2022 and December 31, 2021). Restricted equity investments are carried at cost.

The Company also has various other equity investments, including shares in other financial institutions and fintech companies, totaling $23.9 million and $14.2 million as of March 31, 2022 and December 31, 2021, respectively, which are carried at fair value with any gain or loss reported in the consolidated income statements each reporting period. As no actively-traded market exists for substantially all of the Company's other equity investments, fair value adjustments are determined by reviewing recent observable market transactions, such as stock or equity transactions, that are substantially similar to the Company's existing investments. Other equity investments are also periodically evaluated for impairment using information obtained either directly from the investee or from a third-party broker. If an impairment

has been identified, the carrying value of the investment is written down to its estimated fair market value through a charge to earnings. As of March 31, 2022, no impairment on other equity investments has been recorded.

The Company also holds investments in early-stage focused investment funds, small business investment companies ("SBIC"), and low-income housing partnerships, which are reported in other investments on the consolidated balance sheets.