Investment securities available for sale

9 Months Ended

Sep. 30, 2023

Investment securities available for sale

Investment securities available for sale

Note 4 – Investment securities available for sale

The amortized cost and fair value of investment securities available for sale as of September 30, 2023 and December 31, 2022 are as follows (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
September 30, 2023
U.S. Government agency obligations	$	20,755	$	—	$	(306)	$	20,449
Mortgage-backed securities		78,767		3		(7,179)		71,591
Municipals		2,265		—		(722)		1,543
Subordinated debt		12,446		19		(2,002)		10,463
	$	114,233	$	22	$	(10,209)	$	104,046
December 31, 2022
U.S. Government agency obligations	$	64,631	$	5	$	(3,734)	$	60,902
Mortgage-backed securities		69,151		6		(8,597)		60,560
Municipals		2,268		—		(718)		1,550
Subordinated debt		11,553		29		(741)		10,841
	$	147,603	$	40	$	(13,790)	$	133,853

There were no investments pledged at September 30, 2023.  At December 31, 2022, the Company had investment securities with a fair value of $5,613,000, pledged to secure borrowings from the Federal Home Loan Bank of Atlanta ("FHLB").

The Company executed a securities repositioning and balance sheet deleveraging strategy by selling available for sale securities with a total book value of $55,195,000 and a weighted average yield of 1.48% at a pre-tax loss of $4,986,000. The net proceeds from the sale were used to reduce FHLB borrowings by $15.0 million costing 5.57% and the remaining funds were reinvested back into the securities portfolio with a weighted average yield of 5.48%, with a duration of 3.4 years, and a weighted average life of 5.0 years. The transaction was structured to improve the forward run rate on earnings, add interest rate risk protection to a higher for longer and potential down rate environments, while improving tangible common equity and maintaining our strong liquidity position. There were no sales of available for sale securities for the three and nine months ended September 30, 2022.

Investment securities available for sale that have an unrealized loss position at September 30, 2023 and December 31, 2022 are detailed below (in thousands):

	Securities in a loss				Securities in a loss
	position for less than				position for more than
	12 Months				12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
September 30, 2023
U.S. Government agency obligations	$	—	$	—	$	20,083	$	(306)	$	20,083	$	(306)
Mortgage-backed securities		15,759		(296)		29,660		(6,883)		45,419		(7,179)
Municipals		—		—		1,543		(722)		1,543		(722)
Subordinated debt		4,096		(636)		5,685		(1,366)		9,781		(2,002)
	$	19,855	$	(932)	$	56,971	$	(9,277)	$	76,826	$	(10,209)
December 31, 2022
U.S. Government agency obligations	$	21,848	$	(723)	$	37,256	$	(3,011)	$	59,104	$	(3,734)
Mortgage-backed securities		36,089		(3,588)		22,549		(5,009)		58,638		(8,597)
Municipals		—		—		1,549		(718)		1,549		(718)
Subordinated debt		5,305		(498)		2,007		(243)		7,312		(741)
	$	63,242	$	(4,809)	$	63,361	$	(8,981)	$	126,603	$	(13,790)

As of September 30, 2023, there were 62 investments available for sale totaling $76,826,000 that were in a loss position and had an unrealized loss of $10,209,000.

All of the unrealized losses are attributable to movements in interest rates and not to credit deterioration. Currently, the Company believes that it is probable that the Company will be able to collect all amounts due according to the contractual terms of the investments. Because the decline in fair value is attributable to changes in interest rates and not to credit quality, and because it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider these investments to be impaired at September 30, 2023.

The amortized cost and estimated fair value of investment securities available for sale as of September 30, 2023, by contractual maturity, are as follows (in thousands):

	Amortized
	Cost		Fair Value
Less than one year	$	19,962	$	19,681
One to five years		10,797		10,756
Five to ten years		17,446		15,375
More than ten years		66,028		58,234
Total	$	114,233	$	104,046