Investment Securities

12 Months Ended

Dec. 31, 2022

Schedule of Investments [Abstract]

Investment Securities

(4) Investment Securities

A summary of investment securities available-for-sale and securities held-to-maturity is as follows:

(Dollars in thousands)	As of December 31, 2022
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Available-for-sale:
U. S. treasury securities	$	130,684	$	-	$	(7,573	)	$	123,111
U. S. federal agency obligations		2,002		-		(14	)		1,988
Municipal obligations, tax exempt		130,848		59		(3,645	)		127,262
Municipal obligations, taxable		73,520		14		(6,290	)		67,244
Agency mortgage-backed securities		185,451		172		(15,922	)		169,701
Total available-for-sale	$	522,505	$	245	$	(33,444	)	$	489,306
Held-to-maturity:
Other	$	3,524	$	5	$	(77	)	$	3,452
Total held-to-maturity	$	3,524	$	5	$	(77	)	$	3,452

	As of December 31, 2021
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
Available-for-sale:
U. S. treasury securities	$	43,098	$	-	$	(423	)	$	42,675
U. S. federal agency obligations		17,165		67		(37	)		17,195
Municipal obligations, tax exempt		133,558		4,488		(62	)		137,984
Municipal obligations, taxable		39,011		1,171		(136	)		40,046
Agency mortgage-backed securities		142,747		1,339		(1,269	)		142,817
Total	$	375,579	$	7,065	$	(1,927	)	$	380,717

The tables above show that some of the securities in the available-for-sale and held-to-maturity investment portfolio had unrealized losses, or were temporarily impaired, as of December 31, 2022 and 2021. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date.

Securities which were temporarily impaired are shown below, along with the length of time in a continuous unrealized loss position.

(Dollars in thousands)			As of December 31, 2022
			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Available-for-sale	securities		value		losses			value		losses			value		losses
U. S. treasury securities		67	$	85,988	$	(4,591	)	$	37,123	$	(2,982	)	$	123,111	$	(7,573	)
U. S. federal agency obligations		1		1,988		(14	)		-		-			1,988		(14	)
Municipal obligations, tax exempt		274		107,262		(3,020	)		8,495		(625	)		115,757		(3,645	)
Municipal obligations, taxable		108		54,746		(5,006	)		7,571		(1,284	)		62,317		(6,290	)
Agency mortgage-backed securities		100		78,971		(4,550	)		79,882		(11,372	)		158,853		(15,922	)
Total available-for-sale		550	$	328,955	$	(17,181	)	$	133,071	$	(16,263	)	$	462,026	$	(33,444	)
Other		6	$	3,009	$	(77	)	$	-	$	-		$	3,009	$	(77	)
Total		6	$	3,009	$	(77	)	$	-	$	-		$	3,009	$	(77	)

			As of December 31, 2021
			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
U. S. treasury securities		28	$	42,675	$	(423	)	$	-	$	-		$	42,675	$	(423	)
U. S. federal agency obligations		6	$	12,073	$	(30	)	$	3,048	$	(7	)		15,121		(37	)
Municipal obligations, tax exempt		37		12,411		(46	)		1,879		(16	)		14,290		(62	)
Municipal obligations, taxable		13		8,802		(136	)		-		-			8,802		(136	)
Agency mortgage-backed securities		28		95,028		(1,269	)		-		-			95,028		(1,269	)
Total		112	$	170,989	$	(1,904	)	$	4,927	$	(23	)	$	175,916	$	(1,927	)

The Company’s U.S. treasury portfolio consists of securities issued by the United States Department of the Treasury. The receipt of principal and interest on U.S. treasury securities is guaranteed by the full faith and credit of the U.S. government. Based on these factors, along with the Company’s intent to not sell the security and its belief that it was more likely than not that the Company will not be required to sell the security before recovery of its cost basis, the Company believed that the U.S. treasury securities identified in the tables above were temporarily impaired.

The Company’s U.S. federal agency portfolio consists of securities issued by the government-sponsored agencies of FHLMC, FNMA and the FHLB. The receipt of principal and interest on U.S. federal agency obligations is guaranteed by the respective government-sponsored agency guarantor, such that the Company believes that its U.S. federal agency obligations do not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and its belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the U.S. federal agency obligations identified in the tables above were temporarily impaired.

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. As of December 31, 2022, the Company did not intend to sell and it is more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of its cost basis. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the municipal obligations identified in the tables above were temporarily impaired.

The Company’s agency mortgage-backed securities portfolio consists of securities underwritten to the standards of and guaranteed by the government-sponsored agencies of FHLMC, FNMA and the GNMA. The receipt of principal, at par, and interest on agency mortgage-backed securities is guaranteed by the respective government-sponsored agency guarantor, such that the Company believed that its agency mortgage-backed securities did not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and the Company’s belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the agency mortgage-backed securities identified in the tables above were temporarily impaired.

The Company’s other investment securities portfolio consists of seven subordinated debentures issued by financial institutions. These investment securities were acquired in the Freedom Bank acquisition and classified as held-to-maturity. The securities were issued in 2021 and 2022 with a 10 year maturity and a fixed rate for five years. The securities are callable after the end of the fixed rate term. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the other securities identified in the tables above were temporarily impaired.

The table below includes scheduled principal payments and estimated prepayments, based on observable market inputs, for agency mortgage-backed securities. Actual maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties. The amortized cost and fair value of investment securities at December 31, 2022 are as follows:

	Amortized		Estimated
(Dollars in thousands)	cost		fair value
Due in less than one year	$	22,482	$	22,142
Due after one year but within five years		300,282		280,685
Due after five years but within ten years		147,965		138,189
Due after ten years		51,776		48,290
Total available-for-sale	$	522,505	$	489,306
Held-to-maturity
Due after five years but within ten years	$	3,524	$	3,452
Total held-to-maturity	$	3,524	$	3,452

The Company has not sold any investment securities subsequent to December 31, 2022 and the date of this filing. Sales proceeds and gross realized gains and losses on sales of available-for-sale securities are as follows:

(Dollars in thousands)	Years ended December 31,
Available-for-sale	2022			2021		2020
Sales proceeds	$	52,597		$	16,623	$	61,163
Realized gains	$	-		$	1,138	$	2,449
Realized losses		(1,103	)		-		(1	)
Net realized (losses) gains	$	(1,103	)	$	1,138	$	2,448

Securities with carrying values of $420.8 million and $331.7 million were pledged to secure public funds on deposit, repurchase agreements and as collateral for borrowings at December 31, 2022 and 2021, respectively. Except for U.S. treasuries and federal agency obligations, no investment in a single issuer exceeded 10% of consolidated stockholders’ equity.