Investment Securities

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

The amortized cost and estimated fair value of securities available-for-sale and held-to-maturity along with gross unrealized gains and losses are summarized as follows:


(dollars in thousands)
March 31, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Available for Sale:
U.S. treasury securities	$	95,447	$	3	$	(4,449)	$	91,001
U.S. agency	7,143		3		(251)		6,895
Asset backed securities	28,887		—		(531)		28,356
State, county & municipal securities	174,561		15		(15,695)		158,881
Corporate debt securities	48,113		200		(1,719)		46,594
Mortgage-backed securities	339,028		104		(17,567)		321,565
Total	$	693,179	$	325	$	(40,212)	$	653,292

March 31, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Held to Maturity:
U.S. treasury securities	$	21,511	$	—	$	(776)	$	20,735
U.S. agency	15,507		—		(743)		14,764
State, county & municipal securities	88,781		—		(6,323)		82,458
Mortgage-backed securities	181,210		—		(10,357)		170,853
Total	$	307,009	$	—	$	(18,199)	$	288,810

December 31, 2021
Securities Available for Sale:
U.S. treasury securities	$	88,638	$	—	$	(1,087)	$	87,551
U.S. agency	17,916		5		(140)		17,781
State, county & municipal securities	252,632		877		(3,356)		250,153
Corporate debt securities	48,153		520		(265)		48,408
Mortgage-backed securities	539,172		2,160		(7,061)		534,271
Total	$	946,511	$	3,562	$	(11,909)	$	938,164

The Company transferred certain agency-issued securities from the available-for-sale to held-to-maturity portfolio on January 1, 2022 having a book value of approximately $320.1 million and a market value of approximately $309.7 million. As of the date of transfer, the related pre-tax net unrecognized losses of approximately $10.4 million within the accumulated other comprehensive loss balance are being amortized over the remaining term of the securities using the effective interest method. This transfer was completed after careful consideration of the Company’s intent and ability to hold these securities to maturity. Factors used in assessing the ability to hold these securities to maturity were future liquidity needs and sources of funding.

The amortized cost and fair value of investment securities as of March 31, 2022, by contractual maturity, are shown hereafter. Expected maturities may differ from contractual maturities for certain investments because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. This is often the case with mortgage-backed securities,

which are disclosed separately in the table below.


	Available for Sale				Held to Maturity
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	454	$	454	$	—	$	—
Due after one year through five years	71,981		69,718		6,678		6,505
Due after five years through ten years	121,335		113,599		45,654		43,466
Due after ten years	160,381		147,956		73,467		67,986
	$	354,151	$	331,727	$	125,799	$	117,957

Mortgage-backed securities	339,028		321,565		181,210		170,853
	$	693,179	$	653,292	$	307,009	$	288,810

Proceeds from the sale of investment securities totaled $3.1 million and $1.6 million for the three months ended March 31, 2022 and 2021, respectively. The sale of investment securities for the three months ended March 31, 2022 and 2021 resulted in gross realized gains of $24,000 and $1,000 and losses of $0 and $5,000, respectively.

Investment securities having a carrying value approximating $268.9 million and $126.5 million were pledged to secure public deposits and for other purposes as of March 31, 2022 and December 31, 2021, respectively.

Information pertaining to available-for-sale securities with gross unrealized losses at March 31, 2022 and December 31, 2021 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:


	Less Than 12 Months				12 Months or Greater				Total
(dollars in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
March 31, 2022
U.S. Treasury	$	85,998	$	(4,449)	$	—	$	—	$	85,998	$	(4,449)
U.S. agency	6,893		(251)		—		—		6,893		(251)
Asset backed securities	21,734		(356)		4,052		(175)		25,786		(531)
State, county & municipal securities	142,665		(13,806)		14,430		(1,889)		157,095		(15,695)
Corporate debt securities	43,103		(1,719)		—		—		43,103		(1,719)
Mortgage-backed securities	260,863		(13,274)		39,420		(4,293)		300,283		(17,567)
	$	561,256	$	(33,855)	$	57,902	$	(6,357)	$	619,158	$	(40,212)

December 31, 2021
U.S. Treasury	$	87,302	$	(1,087)	$	—	$	—	$	87,302	$	(1,087)
U.S. agency	10,969		(140)		—		—		10,969		(140)
State, county & municipal securities	180,551		(3,131)		5,970		(225)		186,521		(3,356)
Corporate debt securities	31,977		(265)		—		—		31,977		(265)
Mortgage-backed securities	377,413		(6,421)		21,129		(640)		398,542		(7,061)
	$	688,212	$	(11,044)	$	27,099	$	(865)	$	715,311	$	(11,909)

Information pertaining to held-to-maturity securities with gross unrealized losses at March 31, 2022 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:


	Less Than 12 Months				12 Months or Greater				Total
(dollars in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
March 31, 2022
U.S. Treasury	$	—	$	—	$	—	$	—	$	—	$	—
U.S. agency	20,735		(776)		—		—		20,735		(776)
State, county & municipal securities	14,764		(743)		—		—		14,764		(743)
Corporate debt securities	81,674		(6,308)		783		(15)		82,457		(6,323)
Mortgage-backed securities	153,938		(9,879)		16,915		(478)		170,853		(10,357)
	$	271,111	$	(17,706)	$	17,698	$	(493)	$	288,809	$	(18,199)

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 March 31, 2022, there were 343 available-for-sale securities and 77 held-to-maturity securities that had unrealized losses. These securities are guaranteed by either the U.S. Government, other governments or U.S. corporations. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. As management has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available-for-sale, no declines are deemed to be other than temporary.