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INVESTMENT SECURITIES

12 Months Ended

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

Note 3—INVESTMENT SECURITIES

The amortized cost and estimated fair values of investment securities are summarized below:

AVAILABLE-FOR-SALE:

(Dollars in thousands)		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
December 31, 2022
US Treasury securities		$	60,552			$	—			$	(4,569	)		$	55,983
Government Sponsored Enterprises			2,500				—				(426	)			2,074
Mortgage-backed securities			263,704				10				(19,114	)			244,600
Small Business Administration pools			21,657				60				(630	)			21,087
State and local government			—				—				—				—
Corporate and other securities			8,772				12				(666	)			8,118
Total		$	357,185			$	82			$	(25,405	)		$	331,862

(Dollars in thousands)		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
December 31, 2021
US Treasury securities		$	15,736			$	—			$	300			$	15,436
Government Sponsored Enterprises			2,499				2				—				2,501
Mortgage-backed securities			398,125				3,596				3,992				397,729
Small Business Administration pools			30,835				505				67				31,273
State and local government			105,469				4,918				539				109,848
Corporate and other securities			8,024				157				129				8,052
Total		$	560,688			$	9,178			$	5,027			$	564,839

HELD-TO-MATURITY:

(Dollars in thousands) Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value

December 31, 2022

US Treasury securities $ — $ — $ — $ —

Government Sponsored Enterprises — — — —

Mortgage-backed securities 121,772 — (8,656 ) 113,116

Small Business Administration pools — — — —

State and local government 106,929 — (6,432 ) 100,497

Corporate and other securities — — — —

Total $ 228,701 $ — $ (15,088 ) $ 213,613

There were no investment securities listed as held-to-maturity as of December 31, 2021.

On June 1, 2022, we reclassified $224.5 million in investments to held-to-maturity (HTM) from available-for-sale (AFS). These securities were transferred at fair value at the time of the transfer, which became the new cost basis for the securities held to maturity. The pretax unrealized net holding loss on the available for sale securities on the date of transfer totaled approximately $16.7 million, and continued to be reported as a component of accumulated other comprehensive loss. This net unrealized loss is being amortized to interest income over the remaining life of the securities as a yield adjustment. There were no gains or losses recognized as a result of this transfer. The remaining pretax unrealized net holding loss on these investments was $15.7 million ($12.4 million net of tax) at December 31, 2022.

During the years ended December 31, 2022 and December 31, 2021, the Company did not receive any proceeds from the sale of investment securities available-for-sale. For the years ended December 31, 2022 and December 31, 2021, there were no gross realized gains or losses from the sale of investment securities available-for-sale. The tax (benefit) provision applicable to the net realized gain (loss) was approximately $0, $0, and $21 thousand for 2022, 2021 and 2020, respectively.

The following tables show gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous loss position, at December 31, 2022 and December 31, 2021.

 

Schedule of gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous loss position.

(Dollars in thousands) Less than 12 months 12 months or more Total

December 31, 2022 Fair Unrealized Fair Unrealized Fair Unrealized

Available-for-sale securities: Value Loss Value Loss Value Loss

US Treasury Securities $ 28,827 $ 1,032 $ 27,156 $ 3,537 $ 55,983 $ 4,569

Government Sponsored Enterprise — — 2,074 426 2,074 426

Mortgage-backed securities 81,961 4,435 159,227 14,679 241,188 19,114

Small Business Administration pools 16,066 453 2,592 177 18,658 630

State and local government — — — — — —

Corporate and other securities 2,128 146 3,230 520 5,358 666

Total $ 128,982 $ 6,067 $ 194,279 $ 19,338 $ 323,261 $ 25,405

(Dollars in thousands) Less than 12 months 12 months or more Total

December 31, 2021 Fair Unrealized Fair Unrealized Fair Unrealized

Available-for-sale securities: Value Loss Value Loss Value Loss

US Treasury Securities $ 14,479 $ 264 $ 958 $ 36 $ 15,437 $ 300

Mortgage-backed securities 200,238 3,156 48,570 836 248,808 3,992

Small Business Administration pools 7,232 67 — — 7,232 67

State and local government 21,261 539 — — 21,261 539

Corporate and other securities 3,621 129 — — 3,621 129

Total $ 246,831 $ 4,155 $ 49,528 $ 872 $ 296,359 $ 5,027

 

Schedule of gross unrealized losses and fair values, aggregated by investment category and length of time that individual held-to-maturity have been in a continuous loss position.

(Dollars in thousands) Less than 12 months 12 months or more Total

December 31, 2022 Fair Unrealized Fair Unrealized Fair Unrealized

Held-to-maturity securities: Value Loss Value Loss Value Loss

US Treasury Securities $ — $ — $ — $ — $ — $ —

Government Sponsored Enterprise — — — — — —

Mortgage-backed securities 98,971 7,249 14,145 1,407 113,116 8,656

Small Business Administration pools — — — — — —

State and local government 92,140 5,518 8,357 914 100,497 6,432

Corporate and other securities — — — — — —

Total $ 191,111 $ 12,767 $ 22,502 $ 2,321 $ 213,613 $ 15,088

 

The amortized cost and fair value of investment securities at December 31, 2022, by expected maturity, follow. Expected maturities differ from contractual maturities because borrowers may have the right to call or prepay the obligations with or without prepayment penalties. Mortgage-backed securities are included in the year corresponding with the remaining expected life.

AVAILABLE-FOR-SALE:

(Dollars in thousands) Available-for-sale

Amortized
Cost Fair
Value

Due in one year or less $ 1,215 $ 1,214

Due after one year through five years 111,088 106,385

Due after five years through ten years 221,565 203,959

Due after ten years 23,317 20,304

$ 357,185 $ 331,862

HELD-TO-MATURITY:

(Dollars in thousands) Held-to-maturity

Amortized
Cost Fair
Value

Due in one year or less $ 6,464 $ 6,440

Due after one year through five years 39,184 37,568

Due after five years through ten years 143,211 133,554

Due after ten years 39,842 36,051

$ 228,701 $ 213,613

Securities with an amortized cost of $290.1 million and fair value of $270.4 million at December 31, 2022 were pledged to secure FHLB advances, public deposits, and securities sold under agreements to repurchase. Securities with an amortized cost of $128.5 million and fair value of $130.4 million at December 31, 2021 were pledged to secure FHLB advances, public deposits, and securities sold under agreements to repurchase.

Other-Than-Temporary-Impairment: Of the securities in an unrealized loss position at December 31, 2022, 90 securities were in a continuous loss position for twelve months or more. The Company believes, based on industry analyst reports, credit ratings and/or government guarantees, that the deterioration in value is attributable to changes in market interest rates and is not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary.

The Company evaluates securities available-for-sale for other-than-temporary impairment on a quarterly basis. As a result of this evaluation, at December 31, 2022, the Company has determined that the declines summarized in the tables above are not deemed to be other-than-temporary.