Investment Securities and Other Investments

12 Months Ended

Dec. 31, 2023

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 AFS as of the dates stated.


	December 31, 2023
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
Mortgage backed securities	$	212,214	$	—	$	(35,244	)	$	176,970
U.S. Treasury and agencies		79,856		—		(10,985	)		68,871
State and municipal		50,682		—		(7,357	)		43,325
Corporate bonds		36,902		12		(4,999	)		31,915
Total investment securities	$	379,654	$	12	$	(58,585	)	$	321,081


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

At December 31, 2023 and 2022, securities with fair values of $35.9 million and $241.9 million, respectively, were pledged to secure the Bank’s line of credit with the FHLB. As of December 31, 2023, the Company pledged securities with $260.9 million of par value (amortized cost and fair value of $262.7 million and $218.7 million, respectively) as collateral for the Bank Term Funding Program (“BTFP”), established by the Federal Reserve on March 12, 2023. The BTFP was created in response to industry events in early 2023 to provide banks with additional liquidity via a secured line of credit collateralized by eligible pledged securities.

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, 2023
			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
Mortgage backed securities		86	$	7,497	$	(45	)	$	169,474	$	(35,199	)	$	176,971	$	(35,244	)
U.S. Treasury and agencies		29		283		(1	)		68,399		(10,984	)		68,682		(10,985	)
State and municipal		65		536		(9	)		41,118		(7,348	)		41,654		(7,357	)
Corporate bonds		39		7,469		(830	)		21,683		(4,169	)		29,152		(4,999	)
Total		219	$	15,785	$	(885	)	$	300,674	$	(57,700	)	$	316,459	$	(58,585	)


			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
Mortgage backed securities		78	$	39,006	$	(3,061	)	$	148,449	$	(30,669	)	$	187,455	$	(33,730	)
U.S. Treasury and agencies		28		9,904		(1,039	)		56,686		(11,872	)		66,590		(12,911	)
State and municipal		82		18,252		(2,178	)		31,530		(6,847	)		49,782		(9,025	)
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	)

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, 2023
(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	3,210	$	3,097
Due after one year through five years		40,828		37,337
Due after five years through ten years		127,934		109,682
Due after ten years		207,682		170,965
Total	$	379,654	$	321,081

The Company evaluates the fair value and credit quality of its securities AFS portfolio no less than quarterly. At December 31, 2023 and 2022, 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. The Company evaluated the issuers of these individually, observing that each issuer had strong capital ratios and profitability thereby indicating limited exposure to asset quality or liquidity issues, which resulted in no identifiable credit losses. Investment securities with unrealized losses are generally 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 mortgage backed securities and U.S. Treasury and agencies 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. As of December 31, 2023, there was no ACL for the Company's securities AFS portfolio.

Restricted equity investments consisted of stock in the FHLB (carrying basis $12.3 million and $14.7 million at December 31, 2023 and 2022, respectively), stock in the Federal Reserve Bank of Richmond ("FRB") (carrying basis of $5.9 million and $6.1 million at December 31, 2023 and 2022), respectively, and stock in the Company’s correspondent bank (carrying basis of $468 thousand at both December 31, 2023 and 2022). Restricted equity investments are carried at cost.

The Company has various other equity investments, including investment in a fintech company and other limited partnership investments, totaling $12.9 million and $23.8 million as of December 31, 2023 and 2022, respectively.

The Company also holds investments in early-stage focused investment funds, SBICs, and low-income housing partnerships, which totaled $29.5 million and $24.7 million as of December 31, 2023 and 2022, respectively.