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Note 3 - Available-for-sale Securities

12 Months Ended

Dec. 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

At December 31, 2021 and 2020, the amortized cost, gross unrealized gains, gross unrealized losses and approximate fair value of available-for-sale securities was as follows:

(In thousands)		Amortized Cost				Gross Unrealized Gains				Gross Unrealized (Losses)				Fair Value
December 31, 2021:
U. S. Government agency and mortgage-backed securities		$	67,850			$	24			$	(1,245	)		$	66,629
Corporate bonds			17,754				118				(951	)			16,921
Subordinated notes			4,608				35				(17	)			4,626
SBA loan pools			5,772				-				(169	)			5,603
Municipal bonds			563				1				(2	)			562
		$	96,547			$	178			$	(2,384	)		$	94,341

December 31, 2020:
U. S. Government agency and 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 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 December 31, 2021 and 2020:

(In thousands)

Less than 12 Months

12 Months or More

Total

Fair
Value

Unrealized
(Loss)

Fair
Value

Unrealized
(Loss)

Fair
Value

Unrealized
(Loss)

December 31, 2021:

U. S. Government agency and mortgage-backed securities
$ 60,606 $ (1,196 ) $ 1,610 $ (49 ) $ 62,216 $ (1,245 )

Corporate bonds
15,042 (951 ) - - 15,042 (951 )

Subordinated notes
- - 1,092 (17 ) 1,092 (17 )

SBA loan pools
5,603 (169 ) - - 5,603 (169 )

Municipal bonds
406 (2 ) - - 406 (2 )

$ 81,657 $ (2,318 ) $ 2,702 $ (66 ) $ 84,359 $ (2,384 )

December 31, 2020:

U. S. Government agency and 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 December 31, 2021 and 2020, thirty-two of thirty-nine and twenty-two of thirty-seven available-for-sale securities had unrealized losses with an aggregate depreciation of 2.7% and 4.0% from amortized cost, respectively.

Management believes that none of the losses on available-for-sale securities noted above constitute 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 December 31, 2021.

As of December 31, 2021 and 2020, available-for-sale securities of $36.6 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 at December 31, 2021 and 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

December 31, 2021:

Corporate bonds
$ 17,754 $ - $ - $ 17,754 $ 16,921 $ - $ - $ 16,921

Subordinated notes
- 4,608 - 4,608 - 4,626 - 4,626

SBA loan pools
- - 5,772 5,772 - - 5,603 5,603

Municipal bonds
- 563 - 563 - 562 - 562

Available-for-sale securities with stated maturity dates
17,754 5,171 5,772 28,697 16,921 5,188 5,603 27,712

U. S. Government agency and mortgage-backed securities
13,876 - 53,974 67,850 13,835 - 52,794 66,629

$ 31,630 $ 5,171 $ 59,746 $ 96,547 $ 30,756 $ 5,188 $ 58,397 $ 94,341

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 and 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