Investments

12 Months Ended

Dec. 31, 2021

Investments

Investments

NOTE 2 - INVESTMENTS

The following tables present the amortized costs, unrealized gains, unrealized losses, and estimated fair values of securities available-for-sale and held-to-maturity at December 31, 2021 and 2020:

	December 31, 2021
							Estimated
	Amortized		Unrealized		Unrealized		Fair
SECURITIES AVAILABLE-FOR-SALE	Cost		Gains		Losses		Values
U.S. agency securities	$	21,155	$	133	$	(318)	$	20,970
Corporate securities		9,495		31		(524)		9,002
Municipal bonds		136,377		1,577		(2,521)		135,433
Mortgage-backed securities		88,641		1,457		(696)		89,402
U.S. Small Business Administration securities		16,383		235		(66)		16,552
Total securities available-for-sale		272,051		3,433		(4,125)		271,359
SECURITIES HELD-TO-MATURITY
Corporate securities		7,500		628		—		8,128
Total securities held-to-maturity		7,500		628		—		8,128
Total securities	$	279,551	$	4,061	$	(4,125)	$	279,487

	December 31, 2020
							Estimated
	Amortized		Unrealized		Unrealized		Fair
SECURITIES AVAILABLE-FOR-SALE	Cost		Gains		Losses		Values
U.S. agency securities	$	7,940	$	166	$	(1)	$	8,105
Corporate securities		11,885		54		(939)		11,000
Municipal bonds		69,572		2,435		(150)		71,857
Mortgage-backed securities		65,722		2,541		(76)		68,187
U.S. Small Business Administration securities		18,441		443		(15)		18,869
Total securities available-for-sale		173,560		5,639		(1,181)		178,018
SECURITIES HELD-TO-MATURITY
Corporate securities		7,500		77		(21)		7,556
Total securities held-to-maturity		7,500		77		(21)		7,556
Total securities	$	181,060	$	5,716	$	(1,202)	$	185,574

At December 31, 2021, the Bank pledged seven securities held at the FHLB of Des Moines with a carrying value of $8.1 million to secure Washington State public deposits of $13.9 million with a $5.6 million collateral requirement by the Washington Public Deposit Protection Commission. At December 31, 2020, the Bank pledged seven securities held at the FHLB of Des Moines with a carrying value of $8.8 million to secure Washington State public deposits of $13.2 million with a $5.3 million collateral requirement by the Washington Public Deposit Protection Commission. At December 31, 2021, the Bank pledged two securities with a total carrying value of $3.3 million to secure interest rate swaps designated as cash flow hedges. See “Note 17- Derivatives”, for detail on the Bank’s interest rate swaps.

Investment securities that were in an unrealized loss position at December 31, 2021 and 2020 are presented in the following tables, based on the length of time individual securities have been in an unrealized loss position. Management believes that these securities are only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral.

	December 31, 2021
	Less than 12 Months				12 Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
SECURITIES AVAILABLE-FOR-SALE	Value		Losses		Value		Losses		Value		Losses
U.S. agency securities	$	13,125	$	(105)	$	3,752	$	(213)	$	16,877	$	(318)
Corporate securities		—		—		5,476		(524)		5,476		(524)
Municipal bonds		72,098		(1,961)		14,116		(560)		86,214		(2,521)
Mortgage-backed securities		33,291		(620)		3,825		(76)		37,116		(696)
U.S. Small Business Administration securities		2,988		(66)		—		—		2,988		(66)
Total securities available-for-sale	$	121,502	$	(2,752)	$	27,169	$	(1,373)	$	148,671	$	(4,125)

	December 31, 2020
	Less than 12 Months				12 Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
SECURITIES AVAILABLE-FOR-SALE	Value		Losses		Value		Losses		Value		Losses
U.S. agency securities	$	1,986	$	(1)	$	—	$	—	$	1,986	$	(1)
Corporate securities		7,059		(939)		—		—		7,059		(939)
Municipal bonds		8,377		(150)		—		—		8,377		(150)
Mortgage-backed securities		6,903		(65)		3,002		(11)		9,905		(76)
U.S. Small Business Administration securities		2,314		(15)		—		—		2,314		(15)
Total securities available-for-sale		26,639		(1,170)		3,002		(11)		29,641		(1,181)
SECURITIES HELD-TO-MATURITY
Corporate securities		4,979		(21)		—		—		4,979		(21)
Total securities held-to-maturity		4,979		(21)		—		—		4,979		(21)
Total	$	31,618	$	(1,191)	$	3,002	$	(11)	$	34,620	$	(1,202)

There were 75 investments with unrealized losses of less than one year and 17 investments with unrealized losses of more than one year at December 31, 2021. There were 21 investments with unrealized losses of less than one year and one investment with unrealized losses of more than one year at December 31, 2020. The unrealized losses associated with these investments are believed to be caused by changing market conditions that are considered to be temporary and the Company does not intend to sell the securities, and it is not likely to be required to sell these securities prior to maturity. Based on the Company’s evaluation of these securities, no OTTI was recorded for the years ended December 31, 2021 and 2020. Additional deterioration in market and economic conditions, may have an adverse impact on credit quality in the future and result in other-than-temporary impairment charges.

The contractual maturities of securities available-for-sale and held-to-maturity at December 31, 2021 and 2020 are listed below. Expected maturities of mortgage-backed securities may differ from contractual maturities because borrowers may have the right to call or prepay the obligations; therefore, these securities are classified separately with no specific maturity date.

	December 31, 2021				December 31, 2020
SECURITIES AVAILABLE-FOR-SALE	Amortized		Fair		Amortized		Fair
U.S. agency securities	Cost		Value		Cost		Value
Due after one year through five years	$	959	$	1,004	$	978	$	1,060
Due after five years through ten years		6,920		6,850		1,000		1,036
Due after ten years		13,276		13,116		5,962		6,009
Subtotal		21,155		20,970		7,940		8,105
Corporate securities
Due in one year or less		—		—		2,392		2,433
Due after one year through five years		3,495		3,526		3,493		3,491
Due after five years through ten years		4,000		3,627		4,000		3,676
Due after ten years		2,000		1,849		2,000		1,400
Subtotal		9,495		9,002		11,885		11,000
Municipal bonds
Due in one year or less		—		—		101		101
Due after one year through five years		3,724		3,850		3,749		3,980
Due after five years through ten years		6,857		7,035		7,994		8,321
Due after ten years		125,796		124,548		57,728		59,455
Subtotal		136,377		135,433		69,572		71,857
Mortgage-backed securities
Federal National Mortgage Association (“FNMA”)		75,171		75,737		47,675		50,005
Federal Home Loan Mortgage Corporation (“FHLMC”)		9,606		9,768		11,825		11,913
Government National Mortgage Association (“GNMA”)		3,864		3,897		6,222		6,269
Subtotal		88,641		89,402		65,722		68,187
U.S. Small Business Administration securities
Due after one year through five years		2,485		2,507		2,266		2,353
Due after five years through ten years		4,420		4,515		8,097		8,333
Due after ten years		9,478		9,530		8,078		8,183
Subtotal		16,383		16,552		18,441		18,869
Total securities available-for-sale		272,051		271,359		173,560		178,018
SECURITIES HELD-TO-MATURITY
Corporate securities
Due after five years through ten years		7,500		8,128		7,500		7,556
Total securities held-to-maturity		7,500		8,128		7,500		7,556
Total securities	$	279,551	$	279,487	$	181,060	$	185,574

The proceeds and resulting gains and losses, computed using specific identification from sales of securities available-for-sale for the years ended December 31, 2021 and 2020 were as follows:

	December 31, 2021
	Proceeds		Gross Gains		Gross Losses
Securities available-for-sale	$	—	$	—	$	—

	December 31, 2020
	Proceeds		Gross Gains		Gross Losses
Securities available-for-sale	$	12,214	$	300	$	—