Investment Securities and Other Investments

3 Months Ended

Mar. 31, 2024

Investment Securities and Other Investments

Note 2 – Investment Securities and Other Investments

Investment securities classified as available for sale ("AFS") are carried at fair value in the consolidated balance sheets. The following tables present amortized cost, fair values, and gross unrealized gains and losses of investment securities AFS as of the dates stated.


	March 31, 2024
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
Mortgage backed securities	$	208,856	$	—	$	(37,634	)	$	171,222
U.S. Treasury and agencies		79,633		—		(11,499	)		68,134
State and municipal		50,513		—		(7,587	)		42,926
Corporate bonds		36,895		—		(4,783	)		32,112
Total investment securities	$	375,897	$	—	$	(61,503	)	$	314,394


	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

As of March 31, 2024 and December 31, 2023, securities with a fair value of $213.2 million and $35.9 million, respectively, were pledged to secure the Bank’s line of credit with the Federal Home Loan Bank of Atlanta ("FHLB").

As of March 31, 2024, the Company pledged securities with $69.0 million of par value (amortized cost and fair value of $69.7 million and $56.1 million, respectively) as collateral for the Bank Term Funding Program (“BTFP”) established by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

The following table presents the amortized cost and fair value of securities AFS by contractual maturity as of the date stated. Expected maturities may differ from contractual maturities, as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	March 31, 2024
(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	2,983	$	2,901
Due after one year through five years		46,624		42,215
Due after five years through ten years		122,346		104,433
Due after ten years		203,944		164,845
Total	$	375,897	$	314,394

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, 2024
			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		85	$	5,103	$	(6	)	$	164,119	$	(37,628	)	$	169,222	$	(37,634	)
U.S. Treasury and agencies		29		279		(1	)		67,854		(11,498	)		68,133		(11,499	)
State and municipal		70		977		(7	)		41,308		(7,580	)		42,285		(7,587	)
Corporate bonds		40		6,853		(697	)		24,510		(4,086	)		31,363		(4,783	)
Total		224	$	13,212	$	(711	)	$	297,791	$	(60,792	)	$	311,003	$	(61,503	)


			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	)

The Company evaluates the fair value and credit quality of its securities AFS portfolio no less than quarterly. At March 31, 2024 and December 31, 2023, the majority of securities in an unrealized loss position were of investment grade; however, a portion of the portfolio does 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 March 31, 2024 and December 31, 2023, there was no allowance for credit losses (“ACL”) against the Company's securities AFS portfolio.

Restricted equity investments consisted of stock in the FHLB (carrying value of $15.6 million and $12.3 million as of March 31, 2024 and December 31, 2023, respectively), stock in the Federal Reserve Bank of Richmond ("FRB")

(carrying value of $6.0 million and $5.9 million at March 31, 2024 and December 31, 2023, respectively), and stock in the Bank’s correspondent bank (carrying value of $468 thousand at both March 31, 2024 and December 31, 2023). Restricted equity investments are carried at cost.

The Company also has various other equity investments, including an investment in a fintech company and other limited partnership investments, totaling $12.9 million as of both March 31, 2024 and December 31, 2023, which are carried at fair value with any gain or loss reported in the consolidated statements of operations each reporting period.

The Company also holds investments in early-stage focused investment funds, small business investment companies ("SBIC"), and low-income housing partnerships, which totaled $26.6 million and $29.5 million as of March 31, 2024 and December 31, 2023, respectively, and are reported in other investments on the consolidated balance sheets. These investments do not have readily-determinable fair values, are generally reported at amortized cost, and are periodically evaluated for potential impairment.