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Investment Securities and Other Investments | 9 Months Ended
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Sep. 30, 2024
Schedule of Investments [Abstract] |
Investment Securities and Other Investments | Note 2 – In vestment 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.
|  | September 30, 2024 |
(Dollars in thousands) |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
Available for sale |  |  |  |  |  |  |  |  |  |  |  |
Mortgage backed securities |  | $ | 192,870 |  |  | $ | — |  |  | $ | (27,434 | ) |  | $ | 165,436 |
U.S. Treasury and agencies |  |  | 79,428 |  |  |  | — |  |  |  | (7,975 | ) |  |  | 71,453 |
State and municipal |  |  | 50,295 |  |  |  | 1 |  |  |  | (5,767 | ) |  |  | 44,529 |
Corporate bonds |  |  | 36,883 |  |  |  | — |  |  |  | (3,517 | ) |  |  | 33,366 |
Total investment securities |  | $ | 359,476 |  |  | $ | 1 |  |  | $ | (44,693 | ) |  | $ | 314,784 |
|  | 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 September 30, 2024 and December 31, 2023, securities with a fair value of $273.0 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 December 31, 2023, securities with $260.9 million of par value (amortized cost and fair value of $262.7 million and $218.7 million, respectively) were pledged as collateral for the Bank Term Funding Program (“BTFP”) established by the Board of Governors of the Federal Reserve System (the "Federal Reserve"). Effective March 11, 2024, the Federal Reserve terminated the BTFP. D uring the second quarter of 2024, the Company repaid its BTFP $65.0 million advance upon maturity and unpledged all collateralized securities. 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.
|  | September 30, 2024 |
(Dollars in thousands) |  | Amortized Cost |  |  | Fair Value |
Due in one year or less |  | $ | 2,043 |  |  | $ | 2,031 |
Due after one year through five years |  |  | 49,212 |  |  |  | 46,239 |
Due after five years through ten years |  |  | 116,115 |  |  |  | 102,976 |
Due after ten years |  |  | 192,106 |  |  |  | 163,538 |
Total |  | $ | 359,476 |  |  | $ | 314,784 |
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.
|  |  |  |  | September 30, 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 |  |  | 79 |  |  | $ | — |  |  | $ | — |  |  | $ | 165,434 |  |  | $ | (27,434 | ) |  | $ | 165,434 |  |  | $ | (27,434 | )
U.S. Treasury and agencies |  |  | 29 |  |  |  | — |  |  |  | — |  |  |  | 71,452 |  |  |  | (7,975 | ) |  |  | 71,452 |  |  |  | (7,975 | )
State and municipal |  |  | 64 |  |  |  | 330 |  |  |  | (1 | ) |  |  | 41,953 |  |  |  | (5,766 | ) |  |  | 42,283 |  |  |  | (5,767 | )
Corporate bonds |  |  | 40 |  |  |  | 2,209 |  |  |  | (40 | ) |  |  | 30,407 |  |  |  | (3,477 | ) |  |  | 32,616 |  |  |  | (3,517 | )
Total |  |  | 212 |  |  | $ | 2,539 |  |  | $ | (41 | ) |  | $ | 309,246 |  |  | $ | (44,652 | ) |  | $ | 311,785 |  |  | $ | (44,693 | )
|  |  |  |  | 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 September 30, 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 attributable 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 and government agencies. State and municipal securities showed no indication that the contractual cash flows would 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 impaired securities prior to the recovery of the amortized cost. As of September 30, 2024 and December 31, 2023, there was no allowance for credit losses (“ACL”) against the Company's securities AFS portfolio. Any impairment that has not been recorded through an ACL is recognized in accumulated other comprehensive income (loss). Restricted equity investments consiste d of stock in the FHLB (carrying value of $11.3 million and $12.3 million as of September 30, 2024 and December 31, 2023, respectively), stock in the Federal Reserve Bank of Richmond ("FRB") (carrying value of $9.2 million and $5.9 million at September 30, 2024 and December 31, 2023, respectively), and stock in the Bank’s correspondent bank (carrying value of $468 thousand at both September 30, 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 limited partnerships, totaling $4.5 million and $12.9 million as of September 30, 2024 and December 31, 2023, respectively. The Company reports such investments at fair value if observable market transactions have occurred in similar securities, resulting in a new carrying value that is evaluated for impairment no less than quarterly. These impairment analyses may include quantitative and/or qualitative information obtained either directly from the investee, a third-party broker, or a third-party valuation firm. If a potential impairment has been identified, the carrying value of the investment would be written down to its estimated fair market value through a charge to earnings. In the second quarter of 2024, the Company identified potential impairment triggers related to one of its investments, mainly due to regulatory pressures on banks partnering with fintech companies in the banking-as-a-service sector. These pressures led some fintech companies to announce cost-saving measures and at least one to seek bankruptcy protection. As a result, the Company engaged a third-party valuation firm to value the Company's investment in a fintech company. This valuation resulted in an $8.5 million impairment charge, recorded in fair value adjustments of other equity investments, to adjust the investment to its estimated fair market value during the second quarter of 2024. The Company also holds investments in early stage focused investment funds, small business investment companies ("SBIC"), and low-income housing partnerships, which totaled $21.3 million an d $29.5 million as of September 30, 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. For the nine months ended September 30, 2024, the Company sold $6.4 million of its SBIC investments at a $69 thousand loss, which is reported in other noninterest income.

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- Definition The entire disclosure for investment holdings. This includes the long positions of investments for the entity. It contains investments in affiliated and unaffiliated issuers. The investments include securities and non securities (i.e. commodities and futures contracts). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 210 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147478795/946-210-50-12 + Details
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