Quarterly report pursuant to Section 13 or 15(d)

INVESTMENT SECURITIES

v3.23.4
INVESTMENT SECURITIES
9 Months Ended
Sep. 30, 2023
Investments Securities [Abstract]  
Investment Securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTE 2 –
INVESTMENT SECURITIES
Investment Portfolio Composition
. The following table summarizes the amortized cost and related fair value of investment
securities available-for-sale (“AFS”) and securities held-to-maturity (“HTM”)
 
and the corresponding amounts of gross
 
unrealized gains and losses.
Available for
 
Sale
Amortized
Unrealized
Unrealized
Allowance for
Fair
(Dollars in Thousands)
Cost
Gains
Losses
Credit Losses
Value
September 30, 2023
U.S. Government Treasury
$
22,036
$
-
$
1,727
$
-
$
20,309
U.S. Government Agency
160,275
15
11,328
-
148,962
States and Political Subdivisions
46,479
-
6,272
(12)
40,195
Mortgage-Backed Securities
(1)
74,556
-
13,954
-
60,602
Corporate Debt Securities
63,871
-
8,115
(31)
55,725
Other Securities
(2)
8,259
-
-
-
8,259
Total
 
$
375,476
$
15
$
41,396
$
(43)
$
334,052
December 31, 2022
U.S. Government Treasury
$
23,977
$
1
$
1,928
$
-
$
22,050
U.S. Government Agency
198,888
27
12,863
-
186,052
States and Political Subdivisions
47,197
-
6,855
(13)
40,329
Mortgage-Backed Securities
(1)
80,829
2
11,426
-
69,405
Corporate Debt Securities
97,119
19
8,874
(28)
88,236
Other Securities
(2)
7,222
-
-
-
7,222
Total
 
$
455,232
$
49
$
41,946
$
(41)
$
413,294
Held to Maturity
Amortized
Unrealized
Unrealized
Fair
(Dollars in Thousands)
Cost
Gains
Losses
Value
September 30, 2023
U.S. Government Treasury
$
457,602
$
-
$
24,452
$
433,150
Mortgage-Backed Securities
(1)
174,474
-
24,976
149,498
Total
 
$
632,076
$
-
$
49,428
$
582,648
December 31, 2022
U.S. Government Treasury
$
457,374
$
-
$
25,641
$
431,733
Mortgage-Backed Securities
(1)
203,370
8
22,410
180,968
Total
 
$
660,744
$
8
$
48,051
$
612,701
(1)
 
Comprised of residential mortgage-backed
 
securities
(2)
 
Includes Federal Home Loan Bank and Federal Reserve Bank stock,
 
recorded at cost of $
3.2
 
million and $
5.1
 
million,
respectively,
 
at September 30, 2023 and $
2.1
 
million and $
5.1
 
million, respectively,
 
at December 31, 2022.
At September 30, 2023 and December 31, 2022, the investment portfolio
 
had $
3.6
 
million and $
0.01
 
million, respectively in equity
securities. These securities do not have a readily determinable fair value
 
and were not credit impaired.
 
Securities with an amortized cost of $
463.6
 
million and $
656.1
 
million at September 30, 2023 and December 31, 2022, respectively,
were pledged to secure public deposits and for other purposes.
The Bank, as a member of the Federal Home Loan Bank of Atlanta (“FHLB”), is required
 
to own capital stock in the FHLB based
generally upon the balances of residential and commercial real estate loans and FHLB
 
advances.
 
FHLB stock, which is included in
other securities,
 
is pledged to secure FHLB advances.
 
No ready market exists for this stock, and it has no quoted fair value; however,
redemption of this stock has historically been at par value.
As a member of the Federal Reserve Bank of Atlanta, the Bank is required to maintain
 
stock in the Federal Reserve Bank of Atlanta
based on a specified ratio relative to the Bank’s
 
capital.
 
Federal Reserve Bank stock is carried at cost.
 
During the third quarter of 2022, the Company transferred certain securities from
 
the AFS to HTM classification.
 
Transfers are made
at fair value on the date of the transfer.
 
The
33
 
securities had an amortized cost basis and fair value of $
168.4
 
million and $
159.0
million, respectively at the time of transfer.
 
The net unamortized, unrealized loss on the transferred securities included
 
in accumulated
other comprehensive loss in the accompanying statement of financial condition
 
at September 30, 2023 totaled $
5.3
 
million.
 
This
amount will continue to be amortized out of accumulated other comprehensive
 
loss over the remaining life of the underlying securities
as an adjustment of the yield on those securities.
Investment Sales.
There were $
30.4
 
million in sales of investment securities for the three and nine months ended
 
September 30, 2023.
There were
no
 
significant sales of investment securities for the three months ended September 30, 2022
 
and $
3.4
 
million in sales for
the nine months ended September 30, 2022.
Maturity Distribution
.
 
At September 30, 2023, the Company’s
 
investment securities had the following maturity distribution based on
contractual maturity.
 
Expected maturities may differ from contractual maturities because borrowers
 
may have the right to call or
prepay obligations.
 
Mortgage-backed securities (“MBS”) and certain amortizing U.S. government
 
agency securities are shown
separately because they are not due at a certain maturity date.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available for
 
Sale
Held to Maturity
(Dollars in Thousands)
Amortized Cost
Fair Value
Amortized Cost
Fair Value
Due in one year or less
$
26,628
 
$
25,874
 
$
-
 
$
-
Due after one year through five years
 
132,264
 
 
119,087
 
 
457,602
 
 
433,150
Due after five year through ten years
 
45,924
 
 
37,331
 
 
-
 
 
-
Mortgage-Backed Securities
74,556
60,602
174,474
149,498
U.S. Government Agency
 
87,845
 
 
82,899
 
 
-
 
 
-
Other Securities
 
8,259
 
 
8,259
 
 
-
 
 
-
Total
 
$
375,476
 
$
334,052
 
$
632,076
 
$
582,648
Unrealized Losses on Investment Securities.
 
The following table summarizes the available for sale investment securities with
unrealized losses aggregated by major security type and length of time in a continuous
 
unrealized loss position:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less Than
Greater Than
12 Months
12 Months
Total
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in Thousands)
Value
Losses
Value
Losses
Value
Losses
September 30, 2023
Available for
 
Sale
U.S. Government Treasury
$
-
 
$
-
 
$
19,318
 
$
1,727
 
$
19,318
 
$
1,727
U.S. Government Agency
11,833
89
134,243
11,239
146,076
11,328
States and Political Subdivisions
835
 
26
 
37,981
 
6,246
 
38,816
 
6,272
Mortgage-Backed Securities
91
 
1
 
60,492
 
13,953
 
60,583
 
13,954
Corporate Debt Securities
-
 
-
 
55,756
 
8,115
 
55,756
 
8,115
Total
 
$
12,759
 
$
116
 
$
307,790
 
$
41,280
 
$
320,549
 
$
41,396
 
Held to Maturity
U.S. Government Treasury
 
-
 
-
 
 
433,150
 
24,452
 
 
433,150
 
 
24,452
Mortgage-Backed Securities
998
 
38
 
148,500
 
24,938
 
149,498
 
24,976
Total
 
$
998
 
$
38
 
$
581,650
 
$
49,390
 
$
582,648
 
$
49,428
December 31, 2022
Available for
 
Sale
 
U.S. Government Treasury
$
983
 
$
-
 
$
19,189
 
$
1,928
 
$
20,172
 
$
1,928
U.S. Government Agency
63,112
2,572
113,004
10,291
176,116
12,863
States and Political Subdivisions
 
1,425
 
 
2
 
 
38,760
 
 
6,853
 
 
40,185
 
 
6,855
Mortgage-Backed Securities
6,594
959
60,458
10,467
67,052
11,426
Corporate Debt Securities
26,959
878
58,601
7,996
85,560
8,874
Total
 
$
99,073
 
$
4,411
 
$
290,012
 
$
37,535
 
$
389,085
 
$
41,946
 
Held to Maturity
U.S. Government Treasury
 
177,552
 
 
11,018
 
 
254,181
 
 
14,623
 
 
431,733
 
 
25,641
Mortgage-Backed Securities
88,723
6,814
91,462
15,596
180,185
22,410
Total
 
$
266,275
 
$
17,832
 
$
345,643
 
$
30,219
 
$
611,918
 
$
48,051
At September 30, 2023, there were
894
 
positions (combined AFS and HTM) with unrealized losses totaling $
90.8
 
million.
 
86
 
of these
positions are U.S. Treasury bonds and carry
 
the full faith and credit of the U.S. Government.
 
705
 
are U.S. government agency
securities issued by U.S. government sponsored entities.
 
We believe
 
the long history of no credit losses on government securities
indicates that the expectation of nonpayment of the amortized cost basis is effectively
 
zero.
 
The remaining
103
 
positions (municipal
securities and corporate bonds) have a credit component.
 
At September 30, 2023, all collateralized mortgage obligation securities
(“CMO”), MBS, Small Business Administration securities (“SBA”), U.S. Agency,
 
and U.S. Treasury bonds held were AAA rated.
 
At
September 30, 2023, corporate debt securities had an allowance for credit
 
losses of $
31,000
 
and municipal securities had an allowance
of $
12,000
.
Credit Quality Indicators
The Company monitors the credit quality of its investment securities through
 
various risk management procedures, including the
monitoring of credit ratings.
 
A majority of the debt securities in the Company’s
 
investment portfolio were issued by a U.S.
government entity or agency and are either explicitly or implicitly guaranteed
 
by the U.S. government.
 
The Company believes the
long history of no credit losses on these securities indicates that the expectation
 
of nonpayment of the amortized cost basis is
effectively zero, even if the U.S. government were
 
to technically default.
 
Further, certain municipal securities held by the Company
have been pre-refunded and secured by government guaranteed treasuries.
 
Therefore, for the aforementioned securities, the Company
does
no
t assess or record expected credit losses due to the zero loss assumption.
 
The Company monitors the credit quality of its
municipal and corporate securities portfolio via credit ratings
 
which are updated on a quarterly basis.
 
On a quarterly basis, municipal
and corporate securities in an unrealized loss position are evaluated to determine
 
if the loss is attributable to credit related factors and
if an allowance for credit loss is needed.