Securities

9 Months Ended

Sep. 30, 2022

Note 6 – Securities

The following tables summarize the Bank’s holdings for both securities held-to-maturity and securities available-for-sale as of September 30, 2022 and December 31, 2021 (amounts in thousands):


	September 30, 2022
	Amortized		Gross Unrealized
	Costs		Gains		(Losses)		Fair Value
Held-to-Maturity
US agency obligations	$	3,643	$	-	$	(451)	$	3,192

Available-for-Sale
US Treasuries		4,894		-		(173)		4,721
US agency obligations		71,713		-		(9,574)		62,139
Mortgage-backed securities		81,782		-		(11,388)		70,394
Municipals		49,984		-		(12,185)		37,799
Corporates		17,041		-		(963)		16,078
	$	225,414	$	-	$	(34,283)	$	191,131


	December 31, 2021
	Amortized		Gross Unrealized
	Costs		Gains		(Losses)		Fair Value
Held-to-Maturity
US agency obligations	$	3,655	$	351	$	—	$	4,006

Available-for-Sale
US Treasuries		2,000		2		—		2,002
US agency obligations		59,144		575		(1,249)		58,470
Mortgage-backed securities		38,017		75		(654)		37,438
Municipals		50,806		368		(970)		50,204
Corporates		13,053		169		(69)		13,153
	$	163,020	$	1,189	$	(2,942)	$	161,267

‎

Note 6 – Securities (continued)

The following tables show the gross unrealized losses and fair value of the Bank’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2022 and December 31, 2021 (amounts in thousands):


September 30, 2022	Less than 12 months				More than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Held-to-maturity
U.S. agency obligations	$	3,192	$	451	$	—	$	—	$	3,192	$	451

Available-for-sale
U.S. Treasuries		4,721		173		—		—		4,721		173
U.S. agency obligations		31,238		3,149		30,901		6,425		62,139		9,574
Mortgage-backed securities		48,384		6,405		22,010		4,983		70,394		11,388
Municipals		13,642		3,226		24,157		8,959		37,799		12,185
Corporates		6,600		441		1,478		522		8,078		963

Total temporarily impaired securities	$	107,777	$	13,845	$	78,546	$	20,889	$	186,323	$	34,734

December 31, 2021	Less than 12 months				More than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Held-to-maturity
U.S. agency obligations	$	—	$	—	$	—	$	—	$	—	$	—

Available-for-sale
U.S. Treasuries		—		—		—		—		—		—
U.S. agency obligations		21,893		379		15,233		870		37,126		1,249
Mortgage-backed securities		28,019		402		6,382		252		34,401		654
Municipals		28,028		635		7,952		335		35,980		970
Corporates		1,931		69		—		—		1,931		69

Total temporarily impaired securities	$	79,871	$	1,485	$	29,567	$	1,457	$	109,438	$	2,942

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and may do so more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) the intent of Financial, if any, to sell the security; (4) whether Financial more likely than not will be required to sell the security before recovering its cost; and (5) whether Financial does not expect to recover the security’s entire amortized cost basis (even if Financial does not intend to sell the security).

At September 30, 2022 the Company did not consider the unrealized losses as other-than-temporary losses due to the nature of the securities involved. As of September 30, 2022, the Bank owned 120 securities in an unrealized loss position that were being evaluated for other than temporary impairment. Of the securities, 48 were S&P rated AAA, 64 were rated AA, six were rated A, one was rated BBB, and one was non-rated. As of September 30, 2022, 52 of these securities were municipal issues, 58 were backed by the US government, and 10 were issues of publicly traded domestic corporations.

Based on the analysis performed by management as mandated by the Bank’s investment policy, management believes the default risk to be minimal. Because management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to change in interest rates and other market conditions, no declines currently are deemed to be other-than-temporary.

There were no sales of available-for-sale securities during the three and nine months ended September 30, 2022 and 2021.

Note 6 – Securities (continued)

The amortized costs and fair values of securities at September 30, 2022, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	September 30, 2022
	Amortized
	Costs	Fair Value
Available-for-sale:
Due in one year or less	$ 2,372	$ 2,335
Due after one year through five years	42,150	38,817
Due after five years through ten years	76,278	65,888
Due after ten years	104,614	84,091

Total securities Available-for-sale	$ 225,414	$ 191,131


	Amortized
	Costs	Fair Value
Held-to-maturity:
Due in one year or less	$ -	$ -
Due after one year through five years	-	-
Due after five years through ten years	2,425	2,166
Due after ten years	1,218	1,026

Total securities Held-to-maturity	$ 3,643	$ 3,192