Annual report pursuant to Section 13 and 15(d)

INVESTMENT SECURITIES

v3.24.2
INVESTMENT SECURITIES
12 Months Ended
Dec. 31, 2023
Investment 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 AFS and securities HTM, the corresponding amounts of
 
gross unrealized gains and losses, and allowance for credit
losses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available for
 
Sale
Amortized
Unrealized
Unrealized
Allowance for
Carrying
(Dollars in Thousands)
Cost
Gains
Losses
Credit Losses
Value
December 31, 2023
U.S. Government Treasury
$
25,947
$
1
$
1,269
$
-
$
24,679
U.S. Government Agency
152,983
104
8,053
-
145,034
States and Political Subdivisions
43,951
1
4,861
(8)
39,083
Mortgage-Backed Securities
(1)
73,015
2
9,714
-
63,303
Corporate Debt Securities
63,600
-
6,031
(17)
57,552
Other Securities
(2)
8,251
-
-
-
8,251
Total
 
$
367,747
$
108
$
29,928
$
(25)
$
337,902
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
December 31, 2023
U.S. Government Treasury
$
457,681
$
-
$
16,492
$
441,189
Mortgage-Backed Securities
167,341
13
16,792
150,562
Total
 
$
625,022
$
13
$
33,284
$
591,751
December 31, 2022
U.S. Government Treasury
$
457,374
$
-
$
25,641
$
431,733
Mortgage-Backed Securities
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 recorded
 
at cost of $
3.2
 
million and $
5.1
 
million, respectively,
 
at
December 31, 2023 and of $
2.1
 
million and $
5.1
 
million, respectively,
 
at December 31, 2022.
At December 31, 2023, and 2022, the investment portfolio had $
3.5
 
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 $
578.5
 
million and $
656.1
 
million at December 31, 2023 and 2022, respectively,
 
were
pledged to secure public deposits and for other purposes.
At December 31, 2023 and 2022, 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.
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 the transfer.
 
The net unamortized, unrealized loss on the transferred securities included
in accumulated other comprehensive loss in the accompanying Consolidated
 
Statement of Financial Condition totaled $
4.5
million and $
7.9
 
million at December 31, 2023 and 2022, respectively.
 
This amount will 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
. During 2023, the Company sold $
30.4
 
million of investment securities. There were no significant sales of
investment securities during 2022 and 2021.
Maturity Distribution
.
 
The following table shows the Company’s
 
AFS and HTM investment securities maturity distribution
based on contractual maturity at December 31, 2023.
 
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
$
28,545
 
$
27,854
 
$
90,119
 
$
88,588
Due after one through five years
 
138,299
 
 
127,843
 
 
367,562
 
 
352,601
Due after five through ten years
39,090
33,420
-
-
Mortgage-Backed Securities
 
73,015
 
 
63,303
 
 
167,341
 
 
150,562
U.S. Government Agency
80,547
77,231
-
-
Other Securities
 
8,251
 
 
8,251
 
 
-
 
 
-
Total
 
$
367,747
 
$
337,902
 
$
625,022
 
$
591,751
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, 2023
Available for
 
Sale
U.S. Government Treasury
$
-
 
$
-
 
$
19,751
 
$
1,269
 
$
19,751
 
$
1,269
U.S. Government Agency
12,890
74
121,220
7,979
134,110
8,053
States and Political Subdivisions
1,149
 
31
 
37,785
 
4,830
 
38,934
 
4,861
Mortgage-Backed Securities
 
23
 
 
-
 
 
63,195
 
 
9,714
 
 
63,218
 
 
9,714
Corporate Debt Securities
-
-
57,568
6,031
57,568
6,031
Total
 
14,062
 
105
 
299,519
 
29,823
 
313,581
 
29,928
 
Held to Maturity
U.S. Government Treasury
 
153,880
 
 
3,178
 
 
287,310
 
 
13,314
 
 
441,190
 
 
16,492
Mortgage-Backed Securities
 
786
14
148,282
16,778
149,068
16,792
Total
 
$
154,666
 
$
3,192
 
$
435,592
 
$
30,092
 
$
590,258
 
$
33,284
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
Equity 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 December 31, 2023, there were
878
 
positions (combined AFS and HTM securities) with pre-tax unrealized
 
losses totaling
$
63.2
 
million.
 
At December 31, 2022 there were
928
 
positions (combined AFS and HTM securities) with pre-tax unrealized
losses totaling $
90.0
 
million.
 
For 2023,
86
 
of these of these positions were U.S. Treasury bonds
 
and carry the full faith and credit
of the U.S. Government.
 
691
 
of these positions were U.S. government agency and mortgage-backed
 
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
zero
.
 
The remaining
101
 
positions (municipal securities and corporate
bonds) have a credit component.
 
At December 31, 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 December 31,
2023, corporate debt securities had an allowance for credit losses of $
17,000
 
and municipal securities had an allowance $
8,000
.
 
No
ne of the securities held by the Company were past due or in nonaccrual status at December
 
31, 2023.
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
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.