Note 4 - Investment Securities

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 4 - INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of available for sale (“AFS”) debt securities and held to maturity (“HTM”) debt securities as of  March 31, 2022 and December 31, 2021, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:

			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
March 31, 2022	Cost		Gains		Losses			Value
Available for sale
Government agency securities	$	5,373	$	—	$	(307	)	$	5,066
SBA agency securities		3,182		—		(60	)		3,122
Mortgage-backed securities- Government sponsored agencies		48,686		—		(3,220	)		45,466
Collateralized mortgage obligations		122,621		—		(7,103	)		115,518
Commercial paper		205,326		—		(216	)		205,110
Corporate debt securities		37,477		69		(1,492	)		36,054
Municipal securities		12,693		—		(2,581	)		10,112
Total	$	435,358	$	69	$	(14,979	)	$	420,448
Held to maturity
Municipal taxable securities	$	1,505	$	36	$	—		$	1,541
Municipal securities		4,741		16		(6	)		4,751
Total	$	6,246	$	52	$	(6	)	$	6,292

			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
December 31, 2021	Cost		Gains		Losses			Value
Available for sale
Government agency securities	$	5,689	$	4	$	(83	)	$	5,610
SBA agency securities		3,351		118		—			3,469
Mortgage-backed securities- Government sponsored agencies		55,534		31		(540	)		55,025
Collateralized mortgage obligations		121,377		128		(1,994	)		119,511
Commercial paper		129,962		—		(36	)		129,926
Corporate debt securities		41,999		460		(254	)		42,205
Municipal securities		12,701		—		(187	)		12,514
Total	$	370,613	$	741	$	(3,094	)	$	368,260
Held to maturity
Municipal taxable securities	$	1,506	$	77	$	—		$	1,583
Municipal securities		4,746		248		—			4,994
Total	$	6,252	$	325	$	—		$	6,577

One security with a fair value of $99,000 and $117,000 at March 31, 2022 and December 31, 2021, respectively, was pledged to secure a local agency deposit.

There were no sales of investment securities during the three months ended March 31, 2022 and 2021, respectively.

The amortized cost and fair value of the investment securities portfolio at March 31, 2022 and December 31, 2021 are shown by expected maturity below. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	Less than One Year				More than One Year to Five Years				More than Five Years to Ten Years				More than Ten Years				Total
	Amortized		Estimated		Amortized		Estimated		Amortized		Estimated		Amortized		Estimated		Amortized		Estimated
(dollars in thousands)	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
March 31, 2022
Government agency securities	$	—	$	—	$	5,373	$	5,066	$	—	$	—	$	—	$	—	$	5,373	$	5,066
SBA securities		—		—		1,382		1,344		1,800		1,778		—		—		3,182		3,122
Mortgage-backed securities- Government sponsored agencies		—		—		20,341		19,525		25,528		23,378		2,817		2,563		48,686		45,466
Collateralized mortgage obligations		3,130		3,129		28,604		27,171		90,887		85,218		—		—		122,621		115,518
Commercial paper		205,326		205,110		—		—		—		—		—		—		205,326		205,110
Corporate debt securities		5,000		5,000		7,880		7,839		21,918		20,932		2,679		2,283		37,477		36,054
Municipal securities		—		—		—		—		—		—		12,693		10,112		12,693		10,112
Total available for sale	$	213,456	$	213,239	$	63,580	$	60,945	$	140,133	$	131,306	$	18,189	$	14,958	$	435,358	$	420,448
Municipal taxable securities	$	500	$	500	$	1,005	$	1,041	$	—	$	—	$	—	$	—	$	1,505	$	1,541
Municipal securities		—		—		—		—		1,743		1,740		2,998		3,011		4,741		4,751
Total held to maturity	$	500	$	500	$	1,005	$	1,041	$	1,743	$	1,740	$	2,998	$	3,011	$	6,246	$	6,292
(dollars in thousands)
December 31, 2021
Government agency securities	$	—	$	—	$	5,689	$	5,610	$	—	$	—	$	—	$	—	$	5,689	$	5,610
SBA securities		—		—		1,551		1,582		1,800		1,887		—		—		3,351		3,469
Mortgage-backed securities- Government sponsored agencies		5,001		4,998		35,254		35,000		15,279		15,027		—		—		55,534		55,025
Collateralized mortgage obligations		117		117		78,021		76,496		43,239		42,898		—		—		121,377		119,511
Commercial paper		129,962		129,926		—		—		—		—		—		—		129,962		129,926
Corporate debt securities		7,999		8,007		8,389		8,633		22,927		22,931		2,684		2,634		41,999		42,205
Municipal securities		—		—		—		—		—		—		12,701		12,514		12,701		12,514
Total available for sale	$	143,079	$	143,048	$	128,904	$	127,321	$	83,245	$	82,743	$	15,385	$	15,148	$	370,613	$	368,260
Municipal taxable securities	$	500	$	502	$	1,006	$	1,081	$	—	$	—	$	—	$	—	$	1,506	$	1,583
Municipal securities		—		—		—		—		1,743		1,818		3,003		3,176		4,746		4,994
Total held to maturity	$	500	$	502	$	1,006	$	1,081	$	1,743	$	1,818	$	3,003	$	3,176	$	6,252	$	6,577

The following table summarizes investment securities with unrealized losses at March 31, 2022 and December 31, 2021, aggregated by major security type and length of time in a continuous unrealized loss position:

	Less than Twelve Months							Twelve Months or More							Total
(dollars in thousands)	Unrealized Losses			Estimated Fair Value		No. of Issuances		Unrealized Losses			Estimated Fair Value		No. of Issuances		Unrealized Losses			Estimated Fair Value		No. of Issuances
March 31, 2022
Government agency securities	$	(307	)	$	5,066		3	$	—		$	—		—	$	(307	)	$	5,066		3
SBA securities		(60	)		3,122		4		—			—		—		(60	)		3,122		4
Mortgage-backed securities- Government sponsored agencies		(2,536	)		33,698		12		(684	)		11,768		3		(3,220	)		45,466		15
Collateralized mortgage obligations		(5,989	)		84,608		31		(1,114	)		25,845		7		(7,103	)		110,453		38
Commercial paper		(216	)		205,110		30		—			—		—		(216	)		205,110		30
Corporate debt securities		(1,096	)		20,916		23		(396	)		2,872		2		(1,492	)		23,788		25
Municipal securities		(2,263	)		8,817		8		(318	)		1,295		3		(2,581	)		10,112		11
Total available for sale	$	(12,467	)	$	361,337		111	$	(2,512	)	$	41,780		15	$	(14,979	)	$	403,117		126
Municipal securities	$	(6	)	$	868		2	$	—		$	—		—	$	(6	)	$	868		2
Total held to maturity	$	(6	)	$	868		2	$	—		$	—		—	$	(6	)	$	868		2

	Less than Twelve Months							Twelve Months or More							Total
(dollars in thousands)	Unrealized Losses			Estimated Fair Value		No. of Issuances		Unrealized Losses			Estimated Fair Value		No. of Issuances		Unrealized Losses			Estimated Fair Value		No. of Issuances
December 31, 2021
Government agency securities	$	(83	)	$	4,860		1	$	—		$	—		—	$	(83	)	$	4,860		1
Mortgage-backed securities- Government sponsored agencies		(536	)		44,009		12		(4	)		9,974		2		(540	)		53,983		14
Collateralized mortgage obligations		(1,916	)		79,851		23		(78	)		17,782		4		(1,994	)		97,633		27
Commercial paper		(36	)		129,926		19		—			—		—		(36	)		129,926		19
Corporate debt securities		(254	)		13,208		12		—			—		—		(254	)		13,208		12
Municipal securities		(160	)		11,447		9		(27	)		1,067		2		(187	)		12,514		11
Total available for sale	$	(2,985	)	$	283,301		76	$	(109	)	$	28,823		8	$	(3,094	)	$	312,124		84

Unrealized losses have not been recognized into income because the issuer bonds are of high credit quality, management does not intend to sell, it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery and the decline in fair value is largely due to changes in interest rates. The fair value is expected to recover as the bonds approach maturity.

Management evaluates securities for other-than-temporary impairment (“OTTI”) on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings.

Equity Securities - The Company has several CRA equity investments.  The Company recorded no loss nor gain for the three months ended March 31, 2022 and a loss of $20,000 for the three months ended March 31, 2021 due to the decrease in the fair value of those equity investments without readily determinable fair values.  CRA equity securities were $20.0 million as of March 31, 2022 and December 31, 2021.