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Investment Securities

9 Months Ended

Sep. 30, 2024

Investment Securities

Investment Securities

Note 2— Investment Securities

Available-for-Sale

Each of the securities in the Company’s available-for-sale investment portfolio is either covered by the explicit or implied guarantee of the United States government or one of its agencies or rated investment grade or higher. All available-for-sale securities were current with no securities past due or on nonaccrual as of September 30, 2024 or December 31, 2023.

The following tables summarize the amortized cost and fair value of securities available-for-sale and the corresponding amounts of gross unrealized gains and losses at September 30, 2024 and December 31, 2023.


		September 30, 2024
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
(Dollars in thousands)		Cost			Gains			(Losses)			Value
Available-for-sale
U.S. Treasuries		$	30,892		$	—		$	(888)		$	30,004
U.S. government and federal agencies			13,939			—			(318)			13,621
Corporate bonds			3,000			—			(345)			2,655
U.S. agency collateralized mortgage obligations			38,508			—			(5,602)			32,906
Tax-exempt municipal			1,379			—			(158)			1,221
Taxable municipal			270			—			(9)			261
U.S. agency mortgage-backed			68,438			—			(4,457)			63,981
Total Available-for-sale Securities		$	156,426		$	—		$	(11,777)		$	144,649


		December 31, 2023
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
(Dollars in thousands)		Cost			Gains			(Losses)			Value
Available-for-sale
U.S. Treasuries		$	44,793		$	—		$	(1,816)		$	42,977
U.S. government and federal agencies			13,850			—			(575)			13,275
Corporate bonds			3,000			—			(477)			2,523
U.S. agency collateralized mortgage obligations			40,806			—			(6,496)			34,310
Tax-exempt municipal			1,380			—			(149)			1,231
Taxable municipal			606			—			(19)			587
U.S. agency mortgage-backed			81,255			—			(6,165)			75,090
Total Available-for-sale Securities		$	185,690		$	—		$	(15,697)		$	169,993

The Company did not sell or recognize any gain or loss for any securities for the three or nine months ended September 30, 2024. During the three months ended September 30, 2023, the Company sold available-for-sale securities with a total par value of $161.2

million resulting in a gross pre-tax loss of $17.1 million. During the nine months ended September 30, 2023, the Company sold available-for-sale securities with a total par value of $173.2 million resulting in a gross pre-tax loss of $17.3 million.

Available-for-sale securities having a market value of $56.4 million and $90.3 million at September 30, 2024 and December 31, 2023, respectively, were pledged to secure public deposits and for other purposes required by law. These securities had an amortized cost of $59.1 million and $95.8 million at September 30, 2024 and December 31, 2023, respectively.

The following tables summarize the fair value of securities available-for-sale at September 30, 2024 and December 31, 2023 and the corresponding amounts of gross unrealized losses. Management uses the valuations as of month-end in determining when securities are in an unrealized loss position. Therefore, a security’s market value could have exceeded its amortized cost on other days during the prior twelve-month period.


		September 30, 2024
		Less than 12 Months						12 Months or Longer						Total
					Gross						Gross						Gross
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
(Dollars in thousands)		Value			Losses			Value			Losses			Value			Losses
Available-for-sale
U.S. Treasuries		$	—		$	—		$	30,004		$	(888)		$	30,004		$	(888)
U.S. government and federal agencies			—			—			13,621			(318)			13,621			(318)
Corporate bonds			—			—			2,655			(345)			2,655			(345)
U.S. agency collateralized mortgage obligations			—			—			32,906			(5,602)			32,906			(5,602)
Tax-exempt municipal			—			—			1,221			(158)			1,221			(158)
Taxable municipal			—			—			261			(9)			261			(9)
U.S. agency mortgage-backed			—			—			63,981			(4,457)			63,981			(4,457)
Total Available-for-sale Securities		$	—		$	—		$	144,649		$	(11,777)		$	144,649		$	(11,777)


		December 31, 2023
		Less than 12 Months						12 Months or Longer						Total
					Gross						Gross						Gross
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
(Dollars in thousands)		Value			Losses			Value			Losses			Value			Losses
Available-for-sale
U.S. Treasuries		$	—		$	—		$	42,977		$	(1,816)		$	42,977		$	(1,816)
U.S. government and federal agencies			—			—			13,275			(575)			13,275			(575)
Corporate bonds			—			—			2,523			(477)			2,523			(477)
U.S. agency collateralized mortgage obligations			—			—			34,310			(6,496)			34,310			(6,496)
Tax-exempt municipal			—			—			1,231			(149)			1,231			(149)
Taxable municipal			—			—			587			(19)			587			(19)
U.S. agency mortgage-backed			—			—			75,090			(6,165)			75,090			(6,165)
Total Available-for-sale Securities		$	—		$	—		$	169,993		$	(15,697)		$	169,993		$	(15,697)

The Company had 151 and 158 securities in an unrealized loss position for 12 months or longer as of September 30, 2024 and December 31, 2023, respectively. The Company has evaluated available-for-sale securities in an unrealized loss position for credit related impairment at September 30, 2024 and December 31, 2023 and concluded no impairment existed based on a combination of factors, which included: (1) the securities are of high credit quality, (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuer(s) to settle the securities at a price less than the par value of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis. As such, there was no allowance for credit losses on available-for-sale securities at September 30, 2024.

The table below summarizes the contractual maturities of our available-for-sale investment securities as of September 30, 2024. Issuers may have the right to call or prepay certain obligations, and as such, the expected maturities of our securities may differ from the scheduled contractual maturities presented below.


		September 30, 2024
		Amortized			Fair
(Dollars in thousands)		Cost			Value
Available-for-sale
Due in one year or less		$	23,710		$	23,463
Due after one year through five years			35,095			33,934
Due after five years through ten years			40,145			38,487
Due after ten years			57,476			48,765
Total Available-for-sale Securities		$	156,426		$	144,649

In the prevailing rate environments as of September 30, 2024 and December 31, 2023, the Company’s available-for-sale investment portfolio had an estimated weighted average remaining life of approximately 2.8 years and 3.0 years, respectively.

Held-to-Maturity

Each of the securities in the Company’s held-to-maturity investment portfolio is either covered by the explicit or implied guarantee of the United States government or one of its agencies or rated investment grade or higher. All held-to-maturity securities were current with no securities past due or on nonaccrual as of September 30, 2024 or December 31, 2023.

The following tables summarize the amortized cost and fair value of securities held-to-maturity and the corresponding amounts of gross unrealized losses at September 30, 2024 and December 31, 2023, respectively.


		September 30, 2024
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
(Dollars in thousands)		Cost			Gains			(Losses)			Value
Held-to-maturity
U.S. Treasuries		$	6,002		$	—		$	(501)		$	5,501
U.S. government and federal agencies			35,359			—			(3,874)			31,485
U.S. agency collateralized mortgage obligations			18,227			—			(3,511)			14,716
Taxable municipal			6,045			—			(887)			5,158
U.S. agency mortgage-backed			27,230			—			(4,359)			22,871
Total Held-to-maturity Securities		$	92,863		$	—		$	(13,132)		$	79,731


		December 31, 2023
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
(Dollars in thousands)		Cost			Gains			(Losses)			Value
Held-to-maturity
U.S. Treasuries		$	6,001		$	—		$	(667)		$	5,334
U.S. government and federal agencies			35,434			—			(5,100)			30,334
U.S agency collateralized mortgage obligations			19,395			—			(4,095)			15,300
Taxable municipal			6,057			—			(1,101)			4,956
U.S. agency mortgage-backed			28,618			—			(5,010)			23,608
Total Held-to-maturity Securities		$	95,505		$	—		$	(15,973)		$	79,532

Held-to-maturity securities having a market value of $44.3 million and $36.1 million at September 30, 2024 and December 31, 2023, respectively, were pledged to secure public deposits and for other purposes required by law. These securities had an amortized cost of $50.0 million and $42.3 million at September 30, 2024 and December 31, 2023, respectively.

The Company evaluates the credit risk of its held-to-maturity securities on at least a quarterly basis. The Company estimates expected credit losses on held-to-maturity securities on an individual basis based on a probability of default/loss given default methodology primarily using security-level credit ratings. The primary indicators of credit quality for the Company’s held-to-maturity portfolio are security type and credit rating, which is influenced by a number of factors including obligor cash flow, geography, seniority, and others.

The Company’s held-to-maturity securities with credit risk were comprised of municipal bonds and had a credit rating of AA or better as of September 30, 2024. All other held-to-maturity securities are covered by the explicit or implied guarantee of the United States government or one of its agencies. The Company did not have an allowance for credit losses on held-to-maturity securities as of September 30, 2024 or December 31, 2023.

The table below summarizes the contractual maturities of our held-to-maturity investment securities as of September 30, 2024. Issuers may have the right to call or prepay certain obligations and as such, the expected maturities of our securities are likely to differ from the scheduled contractual maturities presented below.


		September 30, 2024
		Amortized			Fair
(Dollars in thousands)		Cost			Value
Held-to-maturity
Due in one year or less		$	—		$	—
Due after one year through five years			25,428			23,212
Due after five years through ten years			23,647			20,555
Due after ten years			43,788			35,964
Total Held-to-maturity Securities		$	92,863		$	79,731

In the prevailing rate environments as of September 30, 2024 and December 31, 2023, the Company’s held-to-maturity investment portfolio had an estimated weighted average remaining life of approximately 6.0 years and 6.7 years, respectively.

Restricted Securities

The table below summarizes the carrying amount of restricted securities as of September 30, 2024 and December 31, 2023.


(Dollars in thousands)		September 30, 2024			December 31, 2023
Federal Reserve Bank Stock		$	3,323		$	3,310
Federal Home Loan Bank Stock			4,247			1,642
Community Bankers’ Bank Stock			60			60
Total Restricted Securities		$	7,630		$	5,012

Equity Securities

The Company held equity securities with readily determinable fair values totaling $2.7 million and $2.8 million at September 30, 2024 and December 31, 2023, respectively. These securities consist of mutual funds held in a trust and were obtained for the purpose of economically hedging changes in the Company’s nonqualified deferred compensation liability. Changes in the fair value of these securities are reflected in earnings. A gain of $139 thousand and a loss $(60) thousand were recorded in non-interest income in the Consolidated Statements of Income for the three months ended September 30, 2024 and September 30, 2023, respectively. Gains of $298 thousand and $112 thousand were recorded in non-interest income in the Consolidated Statements of Income for the nine months ended September 30, 2024 and September 30, 2023, respectively.