Investment securities available for sale

9 Months Ended

Sep. 30, 2024

Investment securities available for sale

Investment securities available for sale

Note 4 – Investment securities available for sale

The amortized cost and fair value of investment securities available for sale as of September 30, 2024 and December 31, 2023 are as follows (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
September 30, 2024
U.S. Government agency obligations	$	650	$	—	$	(6)	$	644
Mortgage-backed securities		73,942		1,087		(4,336)		70,693
Municipals		2,262		—		(502)		1,760
Subordinated debt		12,209		54		(1,398)		10,865
	$	89,063	$	1,141	$	(6,242)	$	83,962
December 31, 2023
U.S. Government agency obligations	$	20,690	$	—	$	(75)	$	20,615
Mortgage-backed securities		77,275		643		(5,381)		72,537
Municipals		2,264		—		(608)		1,656
Subordinated debt		12,449		30		(1,702)		10,777
	$	112,678	$	673	$	(7,766)	$	105,585

The Company did not have any investments securities pledged at September 30, 2024 and had investment securities with a fair value of $24,926,000 pledged to secure borrowings from the Federal Home Loan Bank of Atlanta ("FHLB") at December 31, 2023.

There were no sales of available for sale securities for the three and nine months ended September 30, 2024.  

During the three and nine months ended September 30, 2023, the Company executed a securities repositioning and balance sheet deleveraging strategy by selling available for sale securities with a total book value of $55,195,000 and a weighted average yield of 1.48% at a pre-tax loss of $4,986,000. The net proceeds from the sale were used to reduce FHLB borrowings by $15.0 million costing 5.57% and the remaining funds were reinvested back into the securities portfolio with a weighted average yield of 5.48%, with a duration of 3.4 years, and a weighted average life of 5.0 years. The transaction was structured to improve the forward run rate on earnings, add interest rate risk protection to a higher for longer and potential down rate environments, while improving tangible common equity and maintaining our strong liquidity position.

Investment securities available for sale that have an unrealized loss position at September 30, 2024 and December 31, 2023 are detailed below (in thousands):

	Securities in a loss				Securities in a loss
	position for less than				position for more than
	12 Months				12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
September 30, 2024
U.S. Government agency obligations	$	—	$	—	$	328		(6)	$	328	$	(6)
Mortgage-backed securities		2,679		(7)		29,596		(4,329)		32,275		(4,336)
Municipals		—		—		1,760		(502)		1,760		(502)
Subordinated debt		—		—		9,636		(1,398)		9,636		(1,398)
	$	2,679	$	(7)	$	41,320	$	(6,235)	$	43,999	$	(6,242)
December 31, 2023
U.S. Government agency obligations	$	—	$	—	$	20,289	$	(75)	$	20,289	$	(75)
Mortgage-backed securities		4,631		(24)		30,311		(5,357)		34,942		(5,381)
Municipals		—		—		1,656		(608)		1,656		(608)
Subordinated debt		4,145		(587)		5,937		(1,115)		10,082		(1,702)
	$	8,776	$	(611)	$	58,193	$	(7,155)	$	66,969	$	(7,766)

As of September 30, 2024, there were 52 investments available for sale totaling $44.0 million that were in a loss position and had an unrealized loss of $6.2 million.

All of the unrealized losses are attributable to increases in interest rates and not to credit deterioration. Currently, the Company believes that it is probable that the Company will be able to collect all amounts due according to the contractual terms of the investments. Because the declines in fair value are attributable to changes in interest rates and not to credit quality, and because it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company has not recorded an allowance for credit losses on these investments at September 30, 2024.

The amortized cost and estimated fair value of investment securities available for sale as of September 30, 2024, by contractual maturity, are as follows (in thousands):

	Amortized
	Cost		Fair Value
Less than one year	$	2,253	$	2,254
One to five years		6,365		8,729
Five to ten years		19,265		15,930
More than ten years		61,180		57,049
Total	$	89,063	$	83,962