INVESTMENT SECURITIES |
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INVESTMENT SECURITIES | NOTE 2 – INVESTMENT SECURITIES The amortized costs, gross unrealized gains and losses, and estimated fair values of securities available for sale as of December 31, 2022 and 2021 are summarized as follows:
The amortized costs and estimated fair values of investment securities available for sale at December 31, 2022, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Investment securities that are not due at a single maturity are shown separately.
There were no securities pledged as of December 31, 2022 and 2021 to secure public deposits and repurchase agreements. There were no securities sold during 2022, 2021 and 2020. Information pertaining to securities with gross unrealized losses at December 31, 2022 and 2021 aggregated by investment category and length of time that individual securities have been in a continuous loss position, are summarized in the table below.
Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. At December 31, 2022, the twenty securities available for sale with an unrealized loss have depreciated 19.68% from the Company’s amortized cost basis. Nine of these securities have been in a loss position for greater than twelve months. State and political subdivisions. The Company’s unrealized loss on eleven investments in state and political subdivision bonds relate to interest rate increases. Management currently does not believe it is probable that it will be unable to collect all amounts due according to the contractual terms of these investments. Because the Company does not plan to sell these investments, and because it is not more likely than not that the Company will be required to sell these investments before the recovery of the par value, which may be at maturity, management does not consider these investments to be other-than-temporarily impaired at December 31, 2022. Mortgage-backed GSE residential. The Company’s unrealized loss on nine investments in residential GSE mortgage-backed securities was caused by interest rate increases. The contractual cash flows of these investments are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost base of the Company’s investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has no immediate plans to sell these investments, and because it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost base, which may be maturity, management does not consider these investments to be other-than-temporarily impaired at December 31, 2022. Equity Securities As of December 31, 2022 and 2021, the Company had equity securities with carrying values totaling $10.3 million and $11.4 million, respectively. The equity securities consist of our investment in a market-rate bond mutual fund that invests in high quality fixed income bonds, mainly government agency securities whose proceeds are designed to positively impact community development throughout the United States. The mutual fund focuses exclusively on providing affordable housing to low- and moderate-income borrowers and renters, including those in Majority Minority Census Tracts. During the years ended December 31, 2022 and 2021, we recognized an unrealized loss of $1.1 million and $114,000, respectively, in net income on our equity securities. The unrealized loss is recorded in Other Expenses on the Consolidated Statements of Income. No unrealized gains or losses on equity securities were recognized in net income during the year ended December 31, 2020. |