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Investment Securities
9 Months Ended
Sep. 30, 2022
Investment Securities [Abstract]  
Investment Securities
2.
 
INVESTMENT SECURITIES
 
The following
 
tables present
 
a summary
 
of the amortized
 
cost, unrealized
 
or unrecognized
 
gains and
 
losses,
 
and fair
value of investment securities at the dates indicated (in
 
thousands):
During the
 
quarter ended
 
September 30, 2022
 
and year
 
ended December 31,
 
2021, the
 
Company transferred,
 
at fair
value, $
63.8
 
million and $
68.7
 
million, respectively, of securities from available-for-sale (“AFS”) to held-to-maturity (“HTM”).
The
 
related
 
net
 
unrealized
 
losses
 
of
 
$
10.6
 
million
 
and
 
net
 
unrealized
 
gains
 
of
 
$
1.1
 
million,
 
respectively,
 
remained
 
in
accumulated
 
other
 
comprehensive
 
income
 
(“AOCI”)
 
and
 
are
 
being
 
amortized
 
over
 
the
 
remaining
 
life
 
of
 
the
 
transferred
securities.
No
 
gains or losses were recognized to income at the transfer
 
date.
Gains and losses on
 
the sale of securities are
 
recorded on the trade date
 
and are determined on a
 
specific identification
basis. The following table presents the proceeds, realized
 
gross gains and realized gross losses on sales and
 
calls of AFS
debt securities for the three and nine months ended September
 
30, 2022 and 2021 (in thousands):
The amortized
 
cost
 
and
 
fair
 
value of
 
investment
 
securities,
 
by contractual
 
maturity,
 
are shown
 
below
 
as of
 
the date
indicated (in thousands).
 
Actual maturities may
 
differ from contractual
 
maturities because borrowers
 
may have the right
 
to
call or prepay
 
obligations with or
 
without call or
 
prepayment penalties. Securities not
 
due at a
 
single maturity date are
 
shown
separately.
At September 30,
 
2022, there
 
were
no
 
securities held
 
in the
 
portfolio from
 
any one
 
issuer,
 
in an
 
amount greater
 
than
10% of total stockholders’
 
equity other than the United States Government and
 
Government Agencies. All the collateralized
mortgage
 
obligations
 
and
 
mortgage-backed
 
securities
 
are
 
issued
 
by
 
United
 
States
 
sponsored
 
entities
 
at
 
September 30,
2022 and December 31, 2021.
Information pertaining
 
to investment
 
securities with
 
gross unrealized
 
losses, aggregated
 
by investment
 
category
 
and
length of
 
time that
 
those
 
individual securities
 
have been
 
in a
 
continuous
 
loss position,
 
are presented
 
as of
 
the following
dates (in thousands):
As of
 
September 30,
 
2022,
 
the unrealized
 
losses
 
associated
 
with
 
$
116.2
 
million
 
of investment
 
securities
 
transferred
from
 
the
 
AFS
 
portfolio
 
to
 
the
 
HTM
 
portfolio
 
represent
 
unrealized
 
losses
 
since
 
the
 
date
 
of
 
purchase,
 
independent
 
of
 
the
impact associated with changes in the cost basis of the
 
securities upon transfer between portfolios.
The Company performs a review
 
of the investments that have
 
an unrealized loss to determine
 
whether there have been
any changes in the
 
economic circumstance of the security
 
issuer to indicate that
 
the unrealized loss is
 
impaired on an other-
than-temporary
 
(“OTTI”) basis. Management
 
considers several factors in
 
their analysis including
 
(i) the severity
 
and duration
of the impairment,
 
(ii) the
 
credit rating
 
of the
 
security including
 
any downgrade,
 
(iii) the
 
intent to
 
sell the security,
 
or if
 
it is
more likely than
 
not that it
 
will be required
 
to sell the
 
security before recovery,
 
(iv) whether
 
there have been
 
any payment
defaults and (v) the underlying guarantor of the securities.
The Company does not consider these
 
investments to be OTTI as the
 
decline in market value is attributable
 
to changes
in market
 
interest rates
 
and not
 
credit quality,
 
and because
 
the Company
 
does not
 
intend to
 
sell the
 
investments before
recovery of
 
its amortized
 
cost basis,
 
which may
 
be at
 
maturity,
 
and it is
 
more likely than
 
not that the
 
Company will
 
not be
required to sell the securities before maturity.
Pledged Securities
The Company
 
maintains a
 
master repurchase
 
agreement with
 
a public
 
banking institution
 
for up
 
to $
20.0
 
million fully
guaranteed with investment
 
securities upon withdrawal.
 
Any amounts borrowed
 
would be at a
 
variable interest rate
 
based
on prevailing rates
 
at the time
 
funding is
 
requested. As
 
of September 30,
 
2022, the
 
Company did
no
t have
 
any securities
pledged under this agreement.
The Company is a Qualified
 
Public Depositor (“QPD”) with
 
the State of Florida. As
 
a QPD, the Company has
 
the legal
authority to maintain public deposits from cities, municipalities, and
 
the State of Florida. These public deposits are secured
by securities
 
pledged to
 
the State
 
of Florida
 
at a
 
ratio of
25
% of
 
the outstanding
 
uninsured deposits.
 
The Company
 
must
also maintain a minimum amount of pledged securities to be
 
in the public funds program.
As of September 30,
 
2022, the Company
 
had a total of
 
$
141.7
 
million in deposits
 
under the public funds
 
program and
pledged
 
to
 
the
 
State
 
of
 
Florida
 
for
 
these
 
public
 
funds
 
were
seventeen
 
corporate
 
bonds
 
with
 
an
 
aggregate
 
fair
 
value
 
of
$
39.1
 
million.
As of
 
December 31,
 
2021, the
 
Company had
 
a total
 
of $
37.3
 
million in
 
deposits under
 
the public
 
funds program
 
and
pledged
 
to
 
the
 
State
 
of
 
Florida
 
for
 
these
 
public
 
funds
 
were
eleven
 
corporate
 
bonds
 
with
 
an
 
aggregate
 
fair
 
value
 
of
$
20.4
 
million.
September 30, 2022
Available-for-sale:
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. Government Agency
$
10,400
$
-
$
(1,372)
$
9,028
Collateralized mortgage obligations
121,760
-
(21,712)
100,048
Mortgage-backed securities - residential
92,649
-
(15,942)
76,707
Mortgage-backed securities - commercial
30,818
-
(3,883)
26,935
Municipal securities
25,104
-
(6,475)
18,629
Bank subordinated debt securities
14,503
28
(969)
13,562
Corporate bonds
4,039
-
(377)
3,662
$
299,273
$
28
$
(50,730)
$
248,571
Held-to-maturity:
 
 
 
U.S. Government Agency
$
45,243
$
-
$
(5,804)
$
39,439
Collateralized mortgage obligations
70,424
-
(6,773)
63,651
Mortgage-backed securities - residential
40,574
-
(4,844)
35,730
Mortgage-backed securities - commercial
11,483
-
(516)
10,967
Corporate bonds
11,141
-
(1,189)
9,952
$
178,865
$
-
$
(19,126)
$
159,739
December 31, 2021
Available-for-sale:
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair Value
U.S. Government Agency
$
10,564
$
6
$
(50)
$
10,520
Collateralized mortgage obligations
160,506
22
(3,699)
156,829
Mortgage-backed securities - residential
120,643
228
(2,029)
118,842
Mortgage-backed securities - commercial
49,905
820
(608)
50,117
Municipal securities
25,164
6
(894)
24,276
Bank subordinated debt securities
27,003
1,418
(13)
28,408
Corporate bonds
12,068
482
-
12,550
$
405,853
$
2,982
$
(7,293)
$
401,542
Held-to-maturity:
U.S. Government Agency
$
34,505
$
14
$
(615)
$
33,904
Collateralized mortgage obligations
44,820
-
(1,021)
43,799
Mortgage-backed securities - residential
26,920
-
(568)
26,352
Mortgage-backed securities - commercial
3,103
-
(90)
3,013
Corporate bonds
13,310
-
(221)
13,089
$
122,658
$
14
$
(2,515)
$
120,157
Three Months Ended September 30,
Nine Months Ended September 30,
Available-for-sale:
2022
2021
2022
2021
Proceeds from sale and call of securities
$
13,809
$
5,674
$
45,647
$
48,939
Gross gains
$
2
$
72
$
218
$
510
Gross losses
(560)
(142)
(758)
(331)
Net realized gain (loss)
$
(558)
$
(70)
$
(540)
$
179
Available-for-sale
Held-to-maturity
September 30, 2022:
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
Due within one year
$
-
$
-
$
1,522
$
1,472
Due after one year through five years
4,039
3,662
9,619
8,480
Due after five years through ten years
15,503
14,362
-
-
Due after ten years
24,104
17,829
-
-
U.S. Government Agency
10,400
9,028
45,243
39,439
Collateralized mortgage obligations
121,760
100,048
70,424
63,651
Mortgage-backed securities - residential
 
92,649
76,707
40,574
35,730
Mortgage-backed securities - commercial
 
30,818
26,935
11,483
10,967
$
299,273
$
248,571
$
178,865
$
159,739
September 30, 2022
Less than 12 months
12 months or more
Total
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
U.S. Government Agency
$
27,684
$
(3,810)
$
20,784
$
(4,726)
$
48,468
$
(8,536)
Collateralized mortgage obligations
58,660
(9,750)
105,038
(23,488)
163,698
(33,238)
Mortgage-backed securities - residential
38,911
(6,510)
73,524
(17,019)
112,435
(23,529)
Mortgage-backed securities - commercial
21,508
(2,715)
16,395
(3,194)
37,903
(5,909)
Municipal securities
 
800
(200)
17,829
(6,275)
18,629
(6,475)
Bank subordinated debt securities
12,533
(970)
-
-
12,533
(970)
Corporate bonds
13,614
(1,045)
-
-
13,614
(1,045)
$
173,710
$
(25,000)
$
233,570
$
(54,702)
$
407,280
$
(79,702)
December 31, 2021
Less than 12 months
12 months or more
Total
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
U.S. Government Agency
$
25,951
$
(254)
$
15,477
$
(516)
$
41,428
$
(770)
Collateralized mortgage obligations
155,668
(3,223)
38,459
(1,497)
194,127
(4,720)
Mortgage-backed securities - residential
88,772
(1,178)
37,373
(1,274)
126,145
(2,452)
Mortgage-backed securities - commercial
25,289
(318)
7,507
(309)
32,796
(627)
Municipal securities
 
11,292
(395)
11,978
(499)
23,270
(894)
Bank subordinated debt securities
4,487
(13)
-
-
4,487
(13)
$
311,459
$
(5,381)
$
110,794
$
(4,095)
$
422,253
$
(9,476)