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Securities
 3 Months Ended
Mar. 31, 2024
Investments, Debt and Equity Securities [Abstract]  
Securities

Note 3. Securities

The amortized cost and fair values of securities available for sale as of March 31, 2024 and December 31, 2023 were as follows (dollars in thousands):

 

March 31, 2024

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

Cost

 

 

Gains

 

 

(Losses)

 

 

Value

 

U.S. Government treasuries

 

$

51,456

 

 

$

-

 

 

$

(324

)

 

$

51,132

 

U.S. Government agencies

 

 

42,051

 

 

 

-

 

 

 

(5,600

)

 

 

36,451

 

Mortgage-backed securities/CMOs

 

 

178,385

 

 

 

96

 

 

 

(26,821

)

 

 

151,660

 

Corporate bonds

 

 

19,705

 

 

 

-

 

 

 

(542

)

 

 

19,163

 

Municipal bonds

 

 

104,123

 

 

 

14

 

 

 

(20,686

)

 

 

83,451

 

Total Securities Available for Sale

 

$

395,720

 

 

$

110

 

 

$

(53,973

)

 

$

341,857

 

 

December 31, 2023

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

Cost

 

 

Gains

 

 

(Losses)

 

 

Value

 

U.S. Government treasuries

 

$

122,288

 

 

$

35

 

 

$

(615

)

 

$

121,708

 

U.S. Government agencies

 

 

45,131

 

 

 

-

 

 

 

(5,550

)

 

 

39,581

 

Mortgage-backed securities/CMOs

 

 

179,920

 

 

 

171

 

 

 

(24,947

)

 

 

155,144

 

Corporate bonds

 

 

19,680

 

 

 

1

 

 

 

(552

)

 

 

19,129

 

Municipal bonds

 

 

104,265

 

 

 

31

 

 

 

(19,263

)

 

 

85,033

 

Total Securities Available for Sale

 

$

471,284

 

 

$

238

 

 

$

(50,927

)

 

$

420,595

 

 

As of March 31, 2024, there were $334.5 million or 279 issues of individual securities, held in an unrealized loss position. These securities have an unrealized loss of $54.0 million and consist of 117 mortgage-backed/collateralized mortgage obligations, 125 municipal bonds, 21 agency bonds, 5 treasury bonds and 11 corporate bonds.

Accrued interest receivable on AFS securities as of March 31, 2024 amounted to $2.0 million.

The following tables summarize all securities with unrealized losses, segregated by length of time in a continuous unrealized loss position, for which no allowance for credit losses was recorded, at March 31, 2024, and December 31, 2023 (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

March 31, 2024

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

U.S. Government treasuries

 

$

-

 

 

$

-

 

 

$

51,132

 

 

$

(324

)

 

$

51,132

 

 

$

(324

)

U.S. Government agencies

 

 

10,099

 

 

 

(4

)

 

 

29,128

 

 

 

(5,596

)

 

 

39,227

 

 

 

(5,600

)

Mortgage-backed/CMOs

 

 

-

 

 

 

-

 

 

 

143,997

 

 

 

(26,821

)

 

 

143,997

 

 

 

(26,821

)

Corporate bonds

 

 

-

 

 

 

-

 

 

 

19,164

 

 

 

(542

)

 

 

19,164

 

 

 

(542

)

Municipal bonds

 

 

432

 

 

 

(3

)

 

 

80,579

 

 

 

(20,683

)

 

 

81,011

 

 

 

(20,686

)

 

 

$

10,531

 

 

$

(7

)

 

$

324,000

 

 

$

(53,966

)

 

$

334,531

 

 

$

(53,973

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

December 31, 2023

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

U.S. Government treasuries

 

$

-

 

 

$

-

 

 

$

52,298

 

 

$

(615

)

 

$

52,298

 

 

$

(615

)

U.S. Government agencies

 

 

10,090

 

 

 

(20

)

 

 

29,490

 

 

 

(5,530

)

 

 

39,580

 

 

 

(5,550

)

Mortgage-backed/CMOs

 

 

-

 

 

 

-

 

 

 

150,045

 

 

 

(24,947

)

 

 

150,045

 

 

 

(24,947

)

Corporate bonds

 

 

-

 

 

 

-

 

 

 

19,129

 

 

 

(552

)

 

 

19,129

 

 

 

(552

)

Municipal bonds

 

 

-

 

 

 

-

 

 

 

82,140

 

 

 

(19,263

)

 

 

82,140

 

 

 

(19,263

)

 

 

$

10,090

 

 

$

(20

)

 

$

333,102

 

 

$

(50,907

)

 

$

343,192

 

 

$

(50,927

)

The Company’s securities portfolio is primarily made up of fixed rate instruments, the prices of which move inversely with interest rates. Any unrealized losses are considered by management to be driven by increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the instruments approach their maturity date or repricing date or if market yields for such investments decline. At the end of any accounting period, the portfolio may have both unrealized gains and losses.

Impairment of debt securities occurs when the fair value of a security is less than its amortized cost. The Company has elected to exclude accrued interest receivable from the amortized cost basis. For debt securities AFS, impairment is recognized in its entirety in net income if either, (i) we intend to sell the security; or, (ii) it is more-likely-than-not that we will be required to sell the security before recovery of its amortized cost basis. If, however, the Company does not intend to sell the security and it is not more-likely-than-not that the Company will be required to sell the security before recovery, the Company evaluates unrealized losses to determine whether a decline in fair value below amortized cost basis is a result of a credit loss, which occurs when the amortized cost basis of the security exceeds the present value of the cash flows expected to be collected from the security, or other factors such as changes in market interest rates. If a credit loss exists, an ACL is recorded that reflects the amount of the impairment related to credit losses, limited by the amount by which the security’s amortized cost basis exceeds its fair value. Changes in the ACL are recorded in net income in the period of change and are included in the provision for credit losses. Changes in the fair value of debt securities AFS not resulting from credit losses are recorded in other comprehensive income (loss). The Company regularly reviews unrealized losses in its investments in securities and cash flows expected to be collected from impaired securities based on criteria including the extent to which market value is below amortized cost, the financial health of and specific prospects for the issuer, the Company’s intention with regard to holding the security to maturity and the likelihood that the Company would be required to sell the security before recovery.

Management does not believe any of the securities in an unrealized loss position are impaired due to credit quality. In addition, issuers have continued to make timely payments of principal and interest. Accordingly, as of March 31, 2024, management believes the impairments detailed in the table above are temporary, and no credit loss has been realized in the Company’s consolidated income statement. Additionally, management has the ability to hold any security with an unrealized loss until maturity or until such time as the value of the security has recovered from its unrealized loss position.

Securities pledged as collateral to secure public deposits and to facilitate borrowing from the FRB had carrying values of $21.5 million and $21.8 million at March 31, 2024 and December 31, 2023, respectively.

During the three months ended March 31, 2024 and 2023, the Company sold AFS securities with a total book value of $39.6 million, incurring a pre-tax loss of $4 thousand, and AFS securities with a book value of $49.9 million incurring a loss of $206 thousand, respectively. Each of these sales was executed as the result of a strategic decision to reinvest proceeds into higher yielding assets.

Restricted securities are securities with limited marketability and consist of stock in the FRB, the Federal Home Loan Bank of Atlanta, CBB Financial Corporation (the holding company for Community Bankers' Bank) and an investment in an SBA loan fund. These restricted securities, totaling $6.2 million and $8.4 million as of March 31, 2024 and December 31, 2023, respectively, are carried at cost.

 

The amortized cost and fair value of AFS debt securities at March 31, 2024 are presented below based upon contractual maturities, by major investment categories (dollars in thousands). Expected maturities may differ from contractual maturities because issuers have the right to call or prepay obligations.

 

 

 

Amortized Cost

 

 

Fair Value

 

U.S. Government treasuries

 

 

 

 

 

 

One year or less

 

$

49,956

 

 

$

49,668

 

After one year to five years

 

 

1,500

 

 

 

1,464

 

 

$

51,456

 

 

$

51,132

 

U.S. Government agencies

 

 

 

 

 

 

One year or less

 

$

10,000

 

 

$

9,996

 

After one year to five years

 

 

10,132

 

 

 

8,833

 

After five years to ten years

 

 

17,919

 

 

 

14,659

 

Ten years or more

 

 

4,000

 

 

 

2,963

 

 

$

42,051

 

 

$

36,451

 

Mortgage-backed securities/CMOs

 

 

 

 

 

 

One year or less

 

$

2,734

 

 

$

2,685

 

After one year to five years

 

 

3,291

 

 

 

3,112

 

After five years to ten years

 

 

5,963

 

 

 

5,406

 

Ten years or more

 

 

166,397

 

 

 

140,457

 

 

$

178,385

 

 

$

151,660

 

Corporate bonds

 

 

 

 

 

 

One year or less

 

$

1,997

 

 

$

1,976

 

After one year to five years

 

 

17,708

 

 

 

17,187

 

 

$

19,705

 

 

$

19,163

 

Municipal bonds

 

 

 

 

 

 

One year or less

 

$

610

 

 

$

596

 

After one year to five years

 

 

3,201

 

 

 

3,104

 

After five years to ten years

 

 

21,324

 

 

 

19,641

 

Ten years or more

 

 

78,988

 

 

 

60,110

 

 

$

104,123

 

 

$

83,451

 

 

 

 

 

 

 

 

Total Debt Securities Available for Sale

 

$

395,720

 

 

$

341,857