Annual report pursuant to Section 13 and 15(d)

INVESTMENT SECURITIES

v3.22.0.1
INVESTMENT SECURITIES
12 Months Ended
Dec. 31, 2021
Investments Securities [Abstract]  
INVESTMENT SECURITIES
Note 2
INVESTMENT SECURITIES
Investment Portfolio Composition
.
 
The following tables summarize the amortized cost and related fair value of investment
securities available-for-sale and securities held-to-maturity,
 
the corresponding amounts of gross unrealized gains and losses, and
allowance for credit losses.
Available for
 
Sale
Amortized
Unrealized
Unrealized
Allowance for
Fair
(Dollars in Thousands)
Cost
Gains
Losses
Credit Losses
Value
December 31, 2021
U.S. Government Treasury
$
190,409
$
65
$
2,606
$
-
$
187,868
U.S. Government Agency
238,490
1,229
2,141
-
237,578
States and Political Subdivisions
47,762
44
811
(15)
46,980
Mortgage-Backed Securities
89,440
27
598
-
88,869
Corporate Debt Securities
87,537
10
1,304
(21)
86,222
Other Securities
(1)
7,094
-
-
-
7,094
Total
 
$
660,732
$
1,375
$
7,460
$
(36)
$
654,611
December 31, 2020
U.S. Government Treasury
$
103,547
$
972
$
-
$
-
$
104,519
U.S. Government Agency
205,972
2,743
184
-
208,531
States and Political Subdivisions
3,543
89
-
-
3,632
Mortgage-Backed Securities
456
59
-
-
515
Other Securities
(1)
7,673
-
-
-
7,673
Total
 
$
321,191
$
3,863
$
184
$
-
$
324,870
Held to Maturity
Amortized
Unrealized
Unrealized
Fair
(Dollars in Thousands)
Cost
Gains
Losses
Value
December 31, 2021
U.S. Government Treasury
$
115,499
$
-
$
1,622
$
113,877
Mortgage-Backed Securities
224,102
2,819
1,099
225,822
Total
 
$
339,601
$
2,819
$
2,721
$
339,699
December 31, 2020
U.S. Government Treasury
$
5,001
$
13
$
-
$
5,014
Mortgage-Backed Securities
164,938
5,223
-
170,161
Total
 
$
169,939
$
5,236
$
-
$
175,175
(1)
Includes Federal Home Loan Bank and Federal Reserve Bank recorded
 
at cost of $
2.0
 
million and $
5.1
 
million, respectively,
 
at
 
December 31, 2021 and of $
2.9
 
million and $
4.8
 
million, respectively,
 
at December 31, 2020.
At December 31, 2021, the investment portfolio had $
0.9
 
million in equity securities.
 
These securities do not have a readily
determinable fair value and were not credit impaired.
 
Additionally, Mortgage-Backed
 
Securities at December 31, 2021 were
comprised solely of residential mortgages.
Securities with an amortized cost of $
463.8
 
million and $
308.2
 
million at December 31, 2021 and 2020, respectively,
 
were
pledged to secure public deposits and for other purposes.
At December 31, 2021 and 2020, there were no holdings of securities of any one
 
issuer, other than the U.S. Government and its
agencies, in an amount greater than 10% of shareowners’ equity.
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.
Investment Sales
. There were no significant sales of investment securities for each of the
 
last three years.
Maturity Distribution
.
 
The following table shows the Company’s
 
AFS and HTM investment securities maturity distribution
based on contractual maturity at December 31, 2021.
 
Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations.
 
Mortgage-backed securities and certain amortizing U.S. government
agency securities are shown separately since they are not due at a certain maturity
 
date.
 
Equity securities do not have a
contractual maturity date.
Available for
 
Sale
Held to Maturity
Amortized
 
Fair
 
Amortized
 
Fair
(Dollars in Thousands)
Cost
Value
Cost
Value
Due in one year or less
$
40,322
 
$
39,916
 
$
-
 
$
-
Due after one through five years
 
297,352
 
 
293,514
 
 
115,499
 
 
113,877
Due after five thru ten years
67,522
66,006
-
-
Mortgage-Backed Securities
 
89,440
 
 
88,869
 
 
224,102
 
 
225,822
U.S. Government Agency
159,002
159,212
-
-
Other Securities
 
7,094
 
 
7,094
 
 
-
 
 
-
Total
 
$
660,732
 
$
654,611
 
$
339,601
 
$
339,699
Unrealized Losses
. The following table summarizes the investment securities with unrealized
 
losses at December 31, aggregated
by major security type and length of time in a continuous unrealized loss position:
Less Than 12 Months
Greater Than 12 Months
Total
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(Dollars in Thousands)
Value
Losses
Value
Losses
Value
Losses
December 31, 2021
Available for
 
Sale
U.S. Government Treasury
$
172,206
 
$
2,606
 
$
-
 
$
-
 
$
172,206
 
$
2,606
U.S. Government Agency
127,484
1,786
17,986
355
145,470
2,141
States and Political Subdivisions
42,122
 
811
 
-
 
-
 
42,122
 
811
Mortgage-Backed Securities
 
81,832
 
 
598
 
 
-
 
 
-
 
 
81,832
 
 
598
Corporate Debt Securities
69,354
1,304
-
-
69,354
1,304
Total
 
492,998
 
7,105
 
17,986
 
355
 
510,984
 
7,460
 
Held to Maturity
U.S. Government Treasury
 
113,877
 
 
1,622
 
 
-
 
 
-
 
 
113,877
 
 
1,622
Mortgage-Backed Securities
 
115,015
1,099
-
-
115,015
1,099
Total
 
$
228,892
 
$
2,721
 
$
-
 
$
-
 
$
228,892
 
$
2,721
December 31, 2020
Available for
 
Sale
 
U.S. Government Agency
$
28,266
$
156
$
4,670
$
28
$
32,936
$
184
Total
 
28,266
 
156
 
4,670
 
28
 
32,936
 
184
At December 31, 2021, there were
401
 
positions (combined AFS and HTM securities) with unrealized losses totaling
 
$
10.2
million.
 
At December 31, 2020 there were
47
 
AFS securities with unrealized losses totaling $
0.2
 
million.
 
For 2021,
59
 
of these
of these positions were U.S. government treasury securities guaranteed
 
by the U.S. government.
 
234
 
of these positions were U.S.
government agency and mortgage-backed securities issued by U.S.
 
government sponsored entities.
 
The declines in the fair value
of these securities are attributable to changes in interest rates and not credit
 
quality.
 
44
 
of these positions were municipal bonds
and
64
 
were corporate debt securities.
 
A majority of the decline in fair value of these securities were attributable to
 
changes in
interest rates.
 
The Company recorded a provision for credit loss of $
36,000
 
in 2021 for certain municipal securities and
collateralized loan obligation securities.
 
No
ne of the securities held by the Company were past due or in nonaccrual status at
December 31, 2021.
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 large portion 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
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
 
not 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.