Investments in Securities |
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Investments in Securities | Note 2: Investments in Securities The amortized cost and fair values of securities classified as available-for-sale were as follows:
At December 31, 2021, the Company’s agency mortgage-backed securities portfolio consisted of FNMA securities totaling $180.5 million, FHLMC securities totaling $47.4 million and GNMA securities totaling $1.5 million. At December 31, 2021, agency collateralized mortgage obligations consisted of GNMA securities totaling $72.4 million, FNMA securities totaling $80.5 million and FHLMC securities totaling $51.4 million. At December 31, 2021, all of the Company’s $229.4 million agency mortgage-backed securities had fixed rates of interest. At December 31, 2021, $170.5 million of the Company’s agency collateralized mortgage obligations had fixed rates of interest and $33.8 million had variable rates of interest. The amortized cost and fair value of available-for-sale securities at December 31, 2021, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
There were no securities classified as held to maturity at December 31, 2021 or December 31, 2020. The amortized cost and fair values of securities pledged as collateral were as follows at December 31, 2021 and 2020:
Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at December 31, 2021 and 2020, was approximately $173.9 million and $24.2 million, respectively, which is approximately 34.7% and 5.8%, respectively, of the Company’s available-for-sale maturity investment portfolio. Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these debt securities are temporary. The following table shows the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2021 and 2020:
Allowance for Credit Losses On January 1, 2021, the Company began evaluating all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments. All of the mortgage-backed, collateralized mortgage, and SBA securities held by the Company are issued by U.S. government-sponsored entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. Likewise, the Company has not experienced historical losses on these types of securities. Accordingly, no allowance for credit losses has been recorded for these securities. Regarding securities issued by state and political subdivisions, management considers the following when evaluating these securities: (i) current issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) updated financial information of the issuer, (v) internal forecasts and (vi) whether such securities provide insurance or other credit enhancement or are pre-refunded by the issuers. These securities are highly rated by major rating agencies and have a long history of no credit losses. Likewise, the Company has not experienced historical losses on these types of securities. Accordingly, no allowance for credit losses has been recorded for these securities. Amounts Reclassified Out of Accumulated Other Comprehensive Income. There were no amounts reclassified from accumulated other comprehensive income related to available-for-sale securities during the year ended December 31, 2021 or December 31, 2020. |