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Note 3 - Available-for-sale Securities

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 3. Available-for-Sale Securities

The amortized cost, gross unrealized gains, gross unrealized losses and fair values of available-for-sale securities at

March 31, 2021

and

December 31, 2020

are as follows:

(In thousands)		Amortized Cost				Gross Unrealized Gains				Gross Unrealized (Losses)				Fair Value
March 31, 2021:
U. S. Government agency mortgage-backed securities		$	22,867			$	109			$	(289	)		$	22,687
Corporate bonds			18,013				272				(952	)			17,333
Subordinated notes			9,040				115				(6	)			9,149
SBA loan pools			8,336				-				(171	)			8,165
Municipal bonds			564				-				(5	)			559
		$	58,820			$	496			$	(1,423	)		$	57,893
December 31, 2020:
U. S. Government agency mortgage-backed securities		$	16,719			$	131			$	(17	)		$	16,833
Corporate bonds			18,014				260				(984	)			17,290
Subordinated notes			9,036				97				(128	)			9,005
SBA loan pools			5,627				-				(60	)			5,567
Municipal bonds			564				3				-				567
		$	49,960			$	491			$	(1,189	)		$	49,262

The following table presents the available-for-sale securities' gross unrealized losses and fair value, aggregated by the length of time the individual securities have been in a continuous loss position as of

March 31, 2021

and

December 31, 2020:

(In thousands)		Less than 12 Months								12 Months or More								Total
		Fair Value				Unrealized (Loss)				Fair Value				Unrealized (Loss)				Fair Value				Unrealized (Loss)
March 31, 2021:
U. S. Government agency mortgage-backed securities		$	14,055			$	(288	)		$	77			$	(1	)		$	14,132			$	(289	)
Corporate bonds			-				-				13,047				(952	)			13,047				(952	)
Subordinated notes			999				(1	)			1,104				(5	)			2,103				(6	)
SBA loan pools			4,458				(127	)			3,707				(44	)			8,165				(171	)
Municipal bonds			403				(5	)			-				-				403				(5	)
		$	19,915			$	(421	)		$	17,935			$	(1,002	)		$	37,850			$	(1,423	)
December 31, 2020:
U. S. Government agency mortgage-backed securities		$	5,797			$	(14	)		$	1,476			$	(3	)		$	7,273			$	(17	)
Corporate bonds			-				-				13,015				(984	)			13,015				(984	)
Subordinated notes			1,878				(122	)			1,103				(6	)			2,981				(128	)
SBA loan pools			1,533				(12	)			4,034				(48	)			5,567				(60	)
		$	9,208			$	(148	)		$	19,628			$	(1,041	)		$	28,836			$	(1,189	)

At

March 31, 2021

and

December 31, 2020,

26

of

41

and

22

of

37

available-for-sale securities had unrealized losses with an aggregate decline of

3.6%

and

4.0%

from the amortized cost of those securities, respectively.

Based on its quarterly reviews, management believes that

none

of the losses on available-for-sale securities noted above constitute other-than-temporary impairment (“OTTI”). The noted losses are considered temporary due to market fluctuations in available interest rates on U.S. Government agency debt, mortgage-backed securities issued by U.S. Government agencies, subordinated notes, corporate debt, and municipal bonds. Management considers the issuers of the securities to be financially sound, the corporate bonds are investment grade, and the collectability of all contractual principal and interest payments is reasonably expected. SBA government guaranteed loan pools securities were purchased at a premium and the impairment was attributable primarily to increased prepayment speeds. The timely payment of principal and interest on these securities is guaranteed by the U.S. Government agency. The contractual terms of the subordinated notes do

not

permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Since Patriot is

not

more-likely-than-

not

to be required to sell the investments before recovery of the amortized cost basis and does

not

intend to sell the securities at a loss,

none

of the available-for-sale securities noted are considered to be OTTI as of

March 31, 2021.

As of

March 31, 2021

and

December 31, 2020,

available-for-sale securities of

$5.6

million and

$6.1

million were pledged primarily to secure municipal deposits, respectively. The securities were pledged to the Federal Reserve Bank (“FRB”).

The following summarizes, by class and contractual maturity, the amortized cost and estimated fair value of available-for-sale debt securities held as of

March 31, 2021

and

December 31, 2020.

The mortgages underlying the mortgage-backed securities are

not

due at a single maturity date. Additionally, these mortgages often are and generally

may

be pre-paid without penalty, creating a degree of uncertainty that such investments can be held until maturity. For convenience, mortgage-backed securities have been included in the summary as a separate line item.

(In thousands)		Amortized Cost																Fair Value
		Due Within 5 years				Due After 5 years through 10 years				Due After 10 years				Total				Due Within 5 years				Due After 5 years through 10 years				Due After 10 years				Total
March 31, 2021:
Corporate bonds		$	4,013			$	14,000			$	-			$	18,013			$	4,285			$	13,048			$	-			$	17,333
Subordinated notes			2,000				7,040				-				9,040				2,003				7,146				-				9,149
SBA loan pools			1,735				3,468				3,133				8,336				1,715				3,427				3,023				8,165
Municipal bonds			-				564				-				564				-				559				-				559
Available-for-sale securities with stated maturity dates			7,748				25,072				3,133				35,953				8,003				24,180				3,023				35,206
U. S. Government agency mortgage-backed securities			1,035				1,343				20,489				22,867				1,036				1,367				20,284				22,687
		$	8,783			$	26,415			$	23,622			$	58,820			$	9,039			$	25,547			$	23,307			$	57,893
December 31, 2020:
Corporate bonds		$	4,014			$	14,000			$	-			$	18,014			$	4,274			$	13,016			$	-			$	17,290
Subordinated notes			2,000				7,036				-				9,036				2,003				7,002				-				9,005
SBA loan pools			1,921				3,706				-				5,627				1,899				3,668				-				5,567
Municipal bonds			-				564				-				564				-				567				-				567
Available-for-sale securities with stated maturity dates			7,935				25,306				-				33,241				8,176				24,253				-				32,429
U. S. Government agency mortgage-backed securities			3,364				1,466				11,889				16,719				3,363				1,491				11,979				16,833
		$	11,299			$	26,772			$	11,889			$	49,960			$	11,539			$	25,744			$	11,979			$	49,262

During the

three

months ended

March 31, 2021,

the Bank purchased

$10.9

million U.S. Government agency mortgage-backed securities and

$3.0

million SBA government guaranteed loan pools securities. During the

three

months ended

March 31, 2020,

the Bank did

not

purchase any available-for-sale securities. There was

no

sale of available-for-sale securities in the

three

months ended

March 31, 2021

and

2020.

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- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
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-URI http://asc.fasb.org/subtopic&trid=2209399

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 946
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-Name Accounting Standards Codification
-Topic 320
-URI http://asc.fasb.org/topic&trid=2196928

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 940
-SubTopic 320
-URI http://asc.fasb.org/subtopic&trid=2176304

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