Quarterly report pursuant to Section 13 or 15(d)

INVESTMENT SECURITIES

v3.20.2
INVESTMENT SECURITIES
9 Months Ended
Sep. 30, 2020
Investments Securities [Abstract]  
Investment securities

NOTE 2 – INVESTMENT SECURITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Portfolio Composition. The following table summarizes the amortized cost and related market value of investment

securities available-for-sale and securities held-to-maturity and the corresponding amounts of gross unrealized gains and losses.

 

 

September 30, 2020

 

 

December 31, 2019

 

Amortized

Unrealized

Unrealized

Market

Amortized

Unrealized

Unrealized

Market

 

Cost

 

Gains

 

Losses

 

Value

 

Cost

 

Gain

 

Losses

 

Value

Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government Treasury

$

118,566

 

$

1,550

 

$

-

 

$

120,116

 

$

231,996

 

$

849

 

$

67

 

$

232,778

U.S. Government Agency

 

192,283

 

 

2,814

 

 

103

 

 

194,994

 

 

155,706

 

 

697

 

 

325

 

 

156,078

States and Political Subdivisions

 

4,722

 

 

108

 

 

-

 

 

4,830

 

 

6,310

 

 

9

 

 

-

 

 

6,319

Mortgage-Backed Securities

 

472

 

 

63

 

 

-

 

 

535

 

 

693

 

 

80

 

 

-

 

 

773

Equity Securities(1)

 

7,778

 

 

-

 

 

-

 

 

7,778

 

 

7,653

 

 

-

 

 

-

 

 

7,653

Total

$

323,821

 

$

4,535

 

$

103

 

$

328,253

 

$

402,358

 

$

1,635

 

$

392

 

$

403,601

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to Maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government Treasury

$

15,007

 

$

51

 

$

-

 

$

15,058

 

$

20,036

 

$

15

 

$

9

 

$

20,042

States and Political Subdivisions

 

-

 

 

-

 

 

-

 

 

-

 

 

1,376

 

 

-

 

 

-

 

 

1,376

Mortgage-Backed Securities

 

187,586

 

 

5,622

 

 

-

 

 

193,208

 

 

218,127

 

 

2,064

 

 

180

 

 

220,011

Total

$

202,593

 

$

5,673

 

$

-

 

$

208,266

 

$

239,539

 

$

2,079

 

$

189

 

$

241,429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investment Securities

$

526,414

 

$

10,208

 

$

103

 

$

536,519

 

$

641,897

 

$

3,714

 

$

581

 

$

645,030

(1) Includes Federal Home Loan Bank and Federal Reserve Bank stock, recorded at cost of $3.0 million and $4.8 million, respectively, at September 30, 2020 and includes Federal Home Loan Bank and Federal Reserve Bank stock recorded at cost of $2.9 million and $4.8 million, respectively, at December 31, 2019.

Securities with an amortized cost of $288.6 million and $353.8 million at September 30, 2020 and December 31, 2019, 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 equity securities, is pledged to secure FHLB advances. No ready market exists for this stock, and it has no quoted market 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.

 

Maturity Distribution. At September 30, 2020, 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 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

 

Market Value

 

Amortized Cost

 

Market Value

Due in one year or less

$

114,346

 

$

115,664

 

$

15,007

 

$

15,058

Due after one year through five years

 

28,946

 

 

29,291

 

 

-

 

 

-

Mortgage-Backed Securities

 

472

 

 

535

 

 

187,586

 

 

193,208

U.S. Government Agency

 

172,279

 

 

174,985

 

 

-

 

 

-

Equity Securities

 

7,778

 

 

7,778

 

 

-

 

 

-

Total

$

323,821

 

$

328,253

 

$

202,593

 

$

208,266

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

 

Market

 

Unrealized

 

Market

 

Unrealized

 

Market

 

Unrealized

(Dollars in Thousands)

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government Agency

$

20,692

 

$

80

 

$

3,656

 

$

23

 

$

24,348

 

$

103

Total

$

20,692

 

$

80

 

$

3,656

 

$

23

 

$

24,348

 

$

103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government Treasury

$

9,955

 

$

-

 

$

93,310

 

$

67

 

$

103,265

 

$

67

U.S. Government Agency

 

36,361

 

 

244

 

 

17,364

 

 

81

 

 

53,725

 

 

325

States and Political Subdivisions

 

578

 

 

-

 

 

-

 

 

-

 

 

578

 

 

-

Mortgage-Backed Securities

 

8

 

 

-

 

 

-

 

 

-

 

 

8

 

 

-

Total

$

46,902

 

$

244

 

$

110,674

 

$

148

 

$

157,576

 

$

392

At September 30, 2020, there were 30 available-for-sale (“AFS”) positions with unrealized losses totaling $0.1 million. All of these positions were U.S. government agency securities issued by U.S. government sponsored entities. Because the declines in the market value of these securities were attributable to changes in interest rates and not credit quality, and because the Company had the ability and intent to hold these investments until there is a recovery in fair value, which may be at maturity, the Company did not record any allowance for credit losses on any investment securities at September 30, 2020. Additionally, none of the AFS or held-to-maturity securities held by the Company were past due or in nonaccrual status at September 30, 2020.

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 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 securities portfolio via credit ratings which are updated on a quarterly basis. On a quarterly basis, municipal 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.