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Investment Securities | 6 Months Ended
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Jun. 30, 2022
Investment Securities |
Investment Securities | 7. Investment Securities The cost basis and fair values of investment securities are summarized as follows: Investment securities available for sale (AFS): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | June 30, 2022
​ | ​ | ​ | ​ | ​ | GROSS | ​ | GROSS | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | UNREALIZED | ​ | UNREALIZED | ​ | FAIR
​ |  | COST BASIS |  | GAINS |  | LOSSES |  | VALUE
​ | ​ | (IN THOUSANDS)
U.S. Agency | ​ | $ | 10,009 | ​ | $ | — | ​ | $ | (723) | ​ | $ | 9,286
U.S. Agency mortgage-backed securities | ​ |  | 97,467 | ​ |  | 58 | ​ |  | (8,144) | ​ |  | 89,381
Municipal | ​ |  | 21,543 | ​ |  | 36 | ​ |  | (1,046) | ​ |  | 20,533
Corporate bonds | ​ |  | 54,329 | ​ |  | 136 | ​ |  | (1,413) | ​ |  | 53,052
Total | ​ | $ | 183,348 | ​ | $ | 230 | ​ | $ | (11,326) | ​ | $ | 172,252
​ Investment securities held to maturity (HTM): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | June 30, 2022
​ | ​ | ​ | ​ | ​ | GROSS | ​ | GROSS | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | UNREALIZED | ​ | UNREALIZED | ​ | FAIR
​ |  | COST BASIS |  | GAINS |  | LOSSES |  | VALUE
​ | ​ | (IN THOUSANDS)
U.S. Agency | ​ | $ | 2,500 | ​ | $ | — | ​ | $ | (313) | ​ | $ | 2,187
U.S. Agency mortgage-backed securities | ​ | ​ | 15,709 | ​ | ​ | 27 | ​ | ​ | (1,383) | ​ | ​ | 14,353
Municipal | ​ |  | 34,287 | ​ |  | 64 | ​ |  | (2,185) | ​ |  | 32,166
Corporate bonds and other securities | ​ |  | 6,507 | ​ |  | — | ​ |  | (98) | ​ |  | 6,409
Total | ​ | $ | 59,003 | ​ | $ | 91 | ​ | $ | (3,979) | ​ | $ | 55,115
​ Investment securities available for sale (AFS): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2021
​ | ​ | ​ | ​ | ​ | GROSS | ​ | GROSS | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | UNREALIZED | ​ | UNREALIZED | ​ | FAIR
​ |  | COST BASIS |  | GAINS |  | LOSSES |  | VALUE
​ | ​ | (IN THOUSANDS)
U.S. Agency | ​ | $ | 7,371 | ​ | $ | 86 | ​ | $ | (70) | ​ | $ | 7,387
U.S. Agency mortgage-backed securities | ​ |  | 80,136 | ​ |  | 1,202 | ​ |  | (1,171) | ​ |  | 80,167
Municipal | ​ |  | 20,066 | ​ |  | 851 | ​ |  | (25) | ​ |  | 20,892
Corporate bonds | ​ |  | 53,843 | ​ |  | 1,028 | ​ |  | (146) | ​ |  | 54,725
Total | ​ | $ | 161,416 | ​ | $ | 3,167 | ​ | $ | (1,412) | ​ | $ | 163,171
​ Investment securities held to maturity (HTM): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2021
​ | ​ | ​ | ​ | ​ | GROSS | ​ | GROSS | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | UNREALIZED | ​ | UNREALIZED | ​ | FAIR
​ | ​ | COST BASIS |  | GAINS |  | LOSSES |  | VALUE
​ | ​ | (IN THOUSANDS)
U.S. Agency |  | $ | 2,500 | ​ | $ | — | ​ | $ | (11) | ​ | $ | 2,489
U.S. Agency mortgage-backed securities |  | ​ | 10,556 | ​ | ​ | 203 | ​ | ​ | (115) | ​ | ​ | 10,644
Municipal | ​ |  | 33,188 | ​ |  | 1,734 | ​ |  | (103) | ​ |  | 34,819
Corporate bonds and other securities | ​ |  | 7,507 | ​ |  | 64 | ​ |  | (7) | ​ |  | 7,564
Total | ​ | $ | 53,751 | ​ | $ | 2,001 | ​ | $ | (236) | ​ | $ | 55,516
​ Maintaining investment quality is a primary objective of the Company’s investment policy which, subject to certain limited exceptions, prohibits the purchase of any investment security below a Moody’s Investor’s Service or Standard & Poor’s rating of “A.” At June 30, 2022, 52.2% of the portfolio was rated “AAA” as compared to 47.1% at December 31, 2021. Approximately 13.3% of the portfolio was either rated below “A” or unrated at June 30, 2022 as compared to 14.7% at December 31, 2021. The Company sold no AFS securities during the second quarter or first six months of 2022. Total proceeds from the sale of AFS securities for the second quarter and first six months of 2021 were $960,000 resulting in $84,000 of gross investment security gains. The carrying value of securities, both available for sale and held to maturity, pledged to secure public and trust deposits was $122,240,000 at June 30, 2022 and $122,574,000 at December 31, 2021. The following tables present information concerning investments with unrealized losses as of June 30, 2022 and December 31, 2021 (in thousands): Total investment securities:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | June 30, 2022
​ | ​ | LESS THAN 12 MONTHS | ​ | 12 MONTHS OR LONGER | ​ | TOTAL
​ | ​ | FAIR | ​ | UNREALIZED | ​ | FAIR | ​ | UNREALIZED | ​ | FAIR | ​ | UNREALIZED
​ |  | VALUE |  | LOSSES |  | VALUE |  | LOSSES |  | VALUE |  | LOSSES
U.S. Agency | ​ | $ | 10,599 | ​ | $ | (911) | ​ | $ | 874 | ​ | $ | (125) | ​ | $ | 11,473 | ​ | $ | (1,036)
U.S. Agency mortgage-backed securities | ​ | ​ | 78,840 | ​ | ​ | (6,307) | ​ | ​ | 15,874 | ​ | ​ | (3,220) | ​ | ​ | 94,714 | ​ | ​ | (9,527)
Municipal | ​ |  | 42,300 | ​ | ​ | (3,052) | ​ | ​ | 1,591 | ​ | ​ | (179) | ​ | ​ | 43,891 | ​ | ​ | (3,231)
Corporate bonds and other securities | ​ |  | 41,606 | ​ | ​ | (1,446) | ​ | ​ | 1,436 | ​ | ​ | (65) | ​ | ​ | 43,042 | ​ | ​ | (1,511)
Total | ​ | $ | 173,345 | ​ | $ | (11,716) | ​ | $ | 19,775 | ​ | $ | (3,589) | ​ | $ | 193,120 | ​ | $ | (15,305)
​ ​ Total investment securities:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2021
​ | ​ | LESS THAN 12 MONTHS | ​ | 12 MONTHS OR LONGER | ​ | TOTAL
​ | ​ | FAIR | ​ | UNREALIZED | ​ | FAIR | ​ | UNREALIZED | ​ | FAIR | ​ | UNREALIZED
​ |  | VALUE |  | LOSSES |  | VALUE |  | LOSSES |  | VALUE |  | LOSSES
U.S. Agency | ​ | $ | 7,419 | ​ | $ | (81) | ​ | $ | — | ​ | $ | — | ​ | $ | 7,419 | ​ | $ | (81)
U.S. Agency mortgage-backed securities | ​ | ​ | 45,422 | ​ | ​ | (972) | ​ | ​ | 6,691 | ​ | ​ | (314) | ​ | ​ | 52,113 | ​ | ​ | (1,286)
Municipal | ​ |  | 7,832 | ​ | ​ | (128) | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 7,832 | ​ | ​ | (128)
Corporate bonds and other securities | ​ |  | 14,558 | ​ | ​ | (92) | ​ | ​ | 2,439 | ​ | ​ | (61) | ​ | ​ | 16,997 | ​ | ​ | (153)
Total | ​ | $ | 75,231 | ​ | $ | (1,273) | ​ | $ | 9,130 | ​ | $ | (375) | ​ | $ | 84,361 | ​ | $ | (1,648)
​ The unrealized losses are primarily a result of increases in market yields from the time of purchase. In general, as market yields rise, the value of securities will decrease; as market yields fall, the fair value of securities will increase. There are 376 positions that are considered temporarily impaired at June 30, 2022. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired. Management has also concluded that based on current information we expect to continue to receive scheduled interest payments as well as the entire principal balance. Furthermore, management does not intend to sell these securities and does not believe it will be required to sell these securities before they recover in value or mature. The interest rate environment and market yields can also have a significant impact on the yield earned on mortgage-backed securities (MBS). Prepayment speed assumptions are an important factor to consider when evaluating the returns on an MBS. Generally, as interest rates decline, borrowers have more incentive to refinance into a lower rate, so prepayments will rise. Conversely, as interest rates increase, prepayments will decline. When an MBS is purchased at a premium, the yield will decrease as prepayments increase and the yield will increase as prepayments decrease. As of June 30, 2022, the Company had low premium risk as the book value of our mortgage-backed securities purchased at a premium was only 100.9% of the par value. Contractual maturities of securities at June 30, 2022 are shown below (in thousands). Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. The weighted average duration of the total investment securities portfolio at June 30, 2022 is 52.0 months and is higher than the duration at December 31, 2021 which was 41.5 months. The duration remains within our internally established guideline to not exceed 60 months which we believe is appropriate to maintain proper levels of liquidity, interest rate risk, market valuation sensitivity and profitability. ​ Total investment securities: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | June 30, 2022
​ | ​ | Available for sale | ​ | Held to maturity
​ |  | Cost Basis |  | Fair Value |  | Cost Basis |  | Fair Value
Within 1 year | ​ | $ | 5,427 | ​ | $ | 5,426 | ​ | $ | 200 | ​ | $ | 201
After 1 year but within 5 years | ​ |  | 36,336 | ​ |  | 35,632 | ​ |  | 12,555 | ​ |  | 12,372
After 5 years but within 10 years | ​ |  | 51,117 | ​ |  | 48,844 | ​ |  | 24,299 | ​ |  | 22,908
Over 10 years | ​ |  | 90,468 | ​ |  | 82,350 | ​ |  | 21,949 | ​ |  | 19,634
Total | ​ | $ | 183,348 | ​ | $ | 172,252 | ​ | $ | 59,003 | ​ | $ | 55,115
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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI https://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 https://asc.fasb.org/subtopic&trid=2176304 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher SEC -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) + Details
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