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MARKETABLE SECURITIES
 9 Months Ended
Sep. 30, 2022
Investments, Debt and Equity Securities [Abstract]  
MARKETABLE SECURITIES

NOTE 2 - MARKETABLE SECURITIES

The following tables summarize the amortized cost and fair value of available for sale and held to maturity securities as of September 30, 2022 and December 31, 2021 and the corresponding amounts of gross unrealized gains and losses:

September 30, 2022

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

35,003

 

 

$

—

 

 

$

1,893

 

 

$

33,110

 

Municipal securities

 

 

9,487

 

 

 

33

 

 

 

103

 

 

 

9,417

 

Mortgage-backed securities

 

 

150,516

 

 

 

5

 

 

 

16,906

 

 

 

133,615

 

Collateralized mortgage obligations

 

 

23,484

 

 

 

6

 

 

 

1,688

 

 

 

21,802

 

Total available for sale

 

$

218,490

 

 

$

44

 

 

$

20,590

 

 

$

197,944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

9,103

 

 

$

—

 

 

$

1,277

 

 

$

7,826

 

Treasury securities

 

 

253,733

 

 

 

—

 

 

 

3,409

 

 

 

250,324

 

Municipal securities

 

 

192,101

 

 

 

86

 

 

 

10,162

 

 

 

182,025

 

Mortgage-backed securities

 

 

135,292

 

 

 

—

 

 

 

15,743

 

 

 

119,549

 

Collateralized mortgage obligations

 

 

43,157

 

 

 

—

 

 

 

7,037

 

 

 

36,120

 

Total held to maturity

 

$

633,386

 

 

$

86

 

 

$

37,628

 

 

$

595,844

 

 

December 31, 2021

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

10,013

 

 

$

—

 

 

$

42

 

 

$

9,971

 

Corporate bonds

 

 

35,080

 

 

 

940

 

 

 

85

 

 

 

35,935

 

Mortgage-backed securities

 

 

221,610

 

 

 

1,477

 

 

 

1,779

 

 

 

221,308

 

Collateralized mortgage obligations

 

 

74,925

 

 

 

971

 

 

 

904

 

 

 

74,992

 

Total available for sale

 

$

341,628

 

 

$

3,388

 

 

$

2,810

 

 

$

342,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

Municipal securities

 

$

181,310

 

 

$

8,364

 

 

$

118

 

 

$

189,556

 

Mortgage-backed securities

 

 

2,953

 

 

 

—

 

 

 

37

 

 

 

2,916

 

Total held to maturity

 

$

184,263

 

 

$

8,364

 

 

$

155

 

 

$

192,472

 

From time to time, we have reclassified certain securities from available for sale to held to maturity. Such transfers are made at fair value at the date of transfer. The net unrealized holding gains or losses at the date of transfer create a premium or discount, respectively, the value of which is retained in securities held to maturity and other comprehensive income and amortized or accreted, respectively, over the remaining life of the underlying securities as an adjustment of yield. During the second quarter of 2022, we transferred $106,157 of securities from available for sale to held to maturity, which included a net unrealized loss on the date of transfer of $13,186. The net unamortized, unrealized loss remaining on transferred securities included in accumulated other comprehensive loss in the accompanying balance sheets totaled $5,540 at September 30, 2022, compared to a net unamortized, unrealized gain of $8,860 at December 31, 2021. 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.

There is no allowance for credit losses recorded for our available for sale or held to maturity debt securities as of September 30, 2022 or December 31, 2021.

Information pertaining to securities with gross unrealized losses as of September 30, 2022 and December 31, 2021, for which no allowance for credit losses has been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position is detailed in the following tables:

 

 

Less Than 12 Months

 

 

12 Months or Longer

 

 

Total

 

September 30, 2022

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

(1,711

)

 

$

31,159

 

 

$

(182

)

 

$

1,951

 

 

$

(1,893

)

 

$

33,110

 

Municipal securities

 

 

(103

)

 

 

4,392

 

 

 

—

 

 

 

—

 

 

 

(103

)

 

 

4,392

 

Mortgage-backed securities

 

 

(11,585

)

 

 

94,622

 

 

 

(5,321

)

 

 

26,174

 

 

 

(16,906

)

 

 

120,796

 

Collateralized mortgage obligations

 

 

(1,688

)

 

 

21,359

 

 

 

—

 

 

 

—

 

 

 

(1,688

)

 

 

21,359

 

Total available for sale

 

$

(15,087

)

 

$

151,532

 

 

$

(5,503

)

 

$

28,125

 

 

$

(20,590

)

 

$

179,657

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

(1,277

)

 

$

7,826

 

 

$

—

 

 

$

—

 

 

$

(1,277

)

 

$

7,826

 

Treasury securities

 

 

(3,409

)

 

 

250,324

 

 

 

—

 

 

 

—

 

 

 

(3,409

)

 

 

250,324

 

Municipal securities

 

 

(8,800

)

 

 

144,467

 

 

 

(1,362

)

 

 

3,171

 

 

 

(10,162

)

 

 

147,638

 

Mortgage-backed securities

 

 

(12,393

)

 

 

102,475

 

 

 

(3,350

)

 

 

17,074

 

 

 

(15,743

)

 

 

119,549

 

Collateralized mortgage obligations

 

 

(7,037

)

 

 

36,120

 

 

 

—

 

 

 

—

 

 

 

(7,037

)

 

 

36,120

 

Total held to maturity

 

$

(32,916

)

 

$

541,212

 

 

$

(4,712

)

 

$

20,245

 

 

$

(37,628

)

 

$

561,457

 

 

 

 

Less Than 12 Months

 

 

12 Months or Longer

 

 

Total

 

December 31, 2021

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

(42

)

 

$

9,971

 

 

$

—

 

 

$

—

 

 

$

(42

)

 

$

9,971

 

Corporate bonds

 

 

(85

)

 

 

11,418

 

 

 

—

 

 

 

—

 

 

 

(85

)

 

 

11,418

 

Mortgage-backed securities

 

 

(1,383

)

 

 

144,367

 

 

 

(396

)

 

 

11,317

 

 

 

(1,779

)

 

 

155,684

 

Collateralized mortgage obligations

 

 

(904

)

 

 

40,172

 

 

 

—

 

 

 

—

 

 

 

(904

)

 

 

40,172

 

Total available for sale

 

$

(2,414

)

 

$

205,928

 

 

$

(396

)

 

$

11,317

 

 

$

(2,810

)

 

$

217,245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal securities

 

$

(37

)

 

$

7,772

 

 

$

(81

)

 

$

2,996

 

 

$

(118

)

 

$

10,768

 

Mortgage-backed securities

 

 

(37

)

 

 

2,916

 

 

 

—

 

 

 

—

 

 

 

(37

)

 

 

2,916

 

Total held to maturity

 

$

(74

)

 

$

10,688

 

 

$

(81

)

 

$

2,996

 

 

$

(155

)

 

$

13,684

 

There were 311 investments in an unrealized loss position, of which 82 were available for sale debt securities with no recorded allowance for credit losses as of September 30, 2022. The available for sale securities in a loss position were composed of corporate bonds, municipal securities, collateralized mortgage obligations and mortgage-backed securities. Management evaluates available for sale debt securities in an unrealized loss position to determine whether the impairment is due to credit-related factors or noncredit-related factors. With respect to the collateralized mortgage obligations and mortgage-backed securities issued by the U.S. Government and its agencies, the Company has determined that a decline in fair value is not due to credit-related factors. The Company monitors the credit quality of other debt securities through the use of credit ratings and other factors specific to an individual security in assessing whether or not the decline in fair value of municipal or corporate securities, relative to their amortized cost, is due to credit-related factors. Triggers to prompt further investigation of securities when the fair value is less than the amortized cost are when a security has been downgraded and falls below an A credit rating, and the security’s unrealized loss exceeds 20% of its book value. Consideration is given to (1) the extent to which fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value. Based on evaluation of available evidence, management believes the unrealized losses on the securities as of September 30, 2022 are not credit-related. Management does not have the intent to sell any of these securities and believes that it is more likely than not the Company will not have to sell any such securities before recovery of cost. The fair values are expected to recover as the securities approach their maturity date or repricing date or if market yields for the investments decline. Accordingly, no allowance for credit losses has been recorded for these securities.

Management assesses held to maturity securities sharing similar risk characteristics on a collective basis for expected credit losses under CECL. As of September 30, 2022, our held to maturity securities consisted of U.S. government agencies, municipal bonds, treasury securities and mortgage-backed securities issued by the U.S. Government and its agencies. With regard to the treasuries, collateralized mortgage obligations and mortgage-backed securities issued by the U.S. government, or agencies thereof, it is expected that the securities will not be settled at prices less than the amortized cost bases of the securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government. For municipal securities, management reviewed key risk indicators, including ratings by credit agencies when available, and determined that there is no current expectation of credit loss. Accordingly, no allowance for credit losses has been recorded for these securities.

Mortgage-backed securities and collateralized mortgage obligations are backed by pools of mortgages that are insured or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association or the Government National Mortgage Association.

As of September 30, 2022, there were no holdings of securities of any one issuer, other than the collateralized mortgage obligations, treasuries and mortgage-backed securities issued by the U.S. government and its agencies, in an amount greater than 10% of total equity attributable to Guaranty Bancshares, Inc.

Securities with fair values of approximately $354,200 and $310,958 at September 30, 2022 and December 31, 2021, respectively, were pledged to secure public fund deposits and for other purposes as required or permitted by law.

There were no securities sold during the nine months ended September 30, 2022 or 2021.

The contractual maturities at September 30, 2022 of available for sale and held to maturity securities at carrying value and estimated fair value are shown below. The Company invests in mortgage-backed securities and collateralized mortgage obligations that have expected maturities that differ from their contractual maturities. These differences arise because borrowers and/or issuers may have the right to call or prepay their obligation with or without call or prepayment penalties.

 

 

Available for Sale

 

 

Held to Maturity

 

September 30, 2022

 

Amortized
Cost

 

 

Estimated
Fair
Value

 

 

Amortized
Cost

 

 

Estimated
Fair
Value

 

Due within one year

 

$

5,019

 

 

$

4,967

 

 

$

208,372

 

 

$

206,824

 

Due after one year through five years

 

 

10,100

 

 

 

9,743

 

 

 

107,637

 

 

 

105,615

 

Due after five years through ten years

 

 

26,285

 

 

 

24,833

 

 

 

67,053

 

 

 

62,297

 

Due after ten years

 

 

3,086

 

 

 

2,984

 

 

 

71,875

 

 

 

65,439

 

Mortgage-backed securities

 

 

150,516

 

 

 

133,615

 

 

 

135,292

 

 

 

119,549

 

Collateralized mortgage obligations

 

 

23,484

 

 

 

21,802

 

 

 

43,157

 

 

 

36,120

 

Total securities

 

$

218,490

 

 

$

197,944

 

 

$

633,386

 

 

$

595,844