Investment Securities and Other Investments

12 Months Ended

Dec. 31, 2022

Investment Securities and Other Investments

Note 3. Investment Securities and Other Investments

Investment securities available for sale are carried on the Company's consolidated balance sheets at fair value. The following table presents amortized cost, fair values, and gross unrealized gains and losses of investment securities as of the dates stated.


	December 31, 2022
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
State and municipal	$	60,018	$	—	$	(9,025	)	$	50,993
U.S. Treasury and agencies		80,073		—		(12,911	)		67,162
Mortgage backed securities		230,015		51		(33,730	)		196,336
Corporate bonds		42,909		124		(3,183	)		39,850
Total investment securities	$	413,015	$	175	$	(58,849	)	$	354,341


	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

At December 31, 2022 and 2021, no securities and securities with fair values of $8.7 million, respectively, were pledged to secure public deposits with the Treasury Board of the Commonwealth of Virginia.

At December 31, 2022 and 2021, securities with fair values of $241.9 million and $23.1 million, respectively, were pledged to secure the Bank’s line of credit with the FHLB.

The following tables present 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, as of the dates stated. 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, 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		82	$	18,252	$	(2,178	)	$	31,530	$	(6,847	)	$	49,782	$	(9,025	)
U.S. Treasury and agencies		28		9,904		(1,039	)		56,686		(11,872	)		66,590		(12,911	)
Mortgage backed securities		78		39,006		(3,061	)		148,449		(30,669	)		187,455		(33,730	)
Corporate bonds		33		26,018		(2,283	)		5,675		(900	)		31,693		(3,183	)
Total		221	$	93,180	$	(8,561	)	$	242,340	$	(50,288	)	$	335,520	$	(58,849	)


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


	December 31, 2022
(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	4,896	$	4,880
Due after one year through five years		30,765		28,243
Due after five years through ten years		136,788		118,605
Due after ten years		240,566		202,613
Total	$	413,015	$	354,341

The Company reviews for OTTI of its investment securities portfolio quarterly. At December 31, 2022 and 2021, the majority of securities in an unrealized loss position were of investment grade; however, a few did not have a third-party investment grade available. These ungraded securities were primarily subordinated debt instruments issued by bank holding companies and are classified as corporate bonds in the tables above. Investment securities with unrealized losses are generally a result of pricing changes due to changes in the interest rate environment since purchase and not as a result of permanent credit impairment. Contractual cash flows for MBS 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 basis $14.7 million and $1.7 million at December 31, 2022 and 2021, respectively), FRB stock (carrying basis of $6.1 million at both December 31, 2022 and 2021), and stock in the Company’s correspondent bank (carrying basis of $468 thousand at both December 31, 2022 and 2021). Restricted equity investments are carried at cost.

The Company has various other equity investments, including shares in other financial institutions and fintech companies, totaling $23.8 million and $14.2 million as of December 31, 2022 and 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.