XML 119 R9.htm IDEA: XBRL DOCUMENT v3.20.1
INVESTMENT SECURITIES
12 Months Ended
Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
SECURITIES

2.          INVESTMENT SECURITIES

The amortized cost and fair value of available for sale investment securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Amortized

​

Gross Unrealized

​

Fair

​

    

Cost

    

Gains

    

Losses

    

Value

December 31, 2019

​

​

​

​

​

​

​

​

​

​

​

​

Residential government-sponsored mortgage-backed securities

​

$

48,540

​

$

455

​

$

(16)

​

$

48,979

Obligations of states and political subdivisions

​

 

17,041

​

 

541

​

 

—

​

 

17,582

Corporate securities

​

 

2,004

​

 

8

​

 

—

​

 

2,012

Trust preferred securities

​

 

2,530

​

 

283

​

 

(245)

​

 

2,568

Residential government-sponsored collateralized mortgage obligations

​

 

36,511

​

 

217

​

 

(39)

​

 

36,689

Government-sponsored agency securities

​

 

14,823

​

 

47

​

 

(48)

​

 

14,822

Agency commercial mortgage-backed securities

​

 

27,557

​

 

192

​

 

(18)

​

 

27,731

SBA pool securities

​

 

14,622

​

 

11

​

 

(196)

​

 

14,437

Total

​

$

163,628

​

$

1,754

​

$

(562)

​

$

164,820

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Amortized

​

Gross Unrealized

​

Fair

​

    

Cost

    

Gains

    

Losses

    

Value

December 31, 2018

​

​

​

​

​

​

​

​

​

​

​

​

Residential government-sponsored mortgage-backed securities

​

$

27,945

​

$

—

​

$

(643)

​

$

27,302

Obligations of states and political subdivisions

​

​

18,305

​

​

30

​

​

(280)

​

​

18,055

Corporate securities

​

​

2,008

​

​

1

​

​

(1)

​

​

2,008

Trust preferred securities

​

​

2,589

​

​

356

​

​

(304)

​

​

2,641

Residential government-sponsored collateralized mortgage obligations

​

​

44,095

​

​

3

​

​

(1,041)

​

​

43,057

Government-sponsored agency securities

​

​

3,247

​

​

—

​

​

(122)

​

​

3,125

Agency commercial mortgage-backed securities

​

​

28,069

​

​

—

​

​

(765)

​

​

27,304

SBA pool securities

​

​

20,183

​

​

10

​

​

(308)

​

​

19,885

Total

​

$

146,441

​

$

400

​

$

(3,464)

​

$

143,377

​

The amortized cost, unrecognized gains and losses, and fair value of investment securities held to maturity were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Amortized

​

Gross Unrecognized

​

Fair

​

    

Cost

    

Gains

    

Losses

    

Value

December 31, 2019

​

​

​

​

​

​

​

​

​

​

​

​

Residential government-sponsored mortgage-backed securities

​

$

22,925

​

$

62

​

$

(52)

​

$

22,935

Obligations of states and political subdivisions

​

 

15,071

 

​

165

 

​

(1)

​

 

15,235

Trust preferred securities

​

 

1,938

 

​

99

 

​

(2)

​

 

2,035

Residential government-sponsored collateralized mortgage obligations

​

 

3,128

 

​

10

 

​

(9)

​

 

3,129

Government-sponsored agency securities

​

 

29,386

 

​

108

 

​

(162)

​

 

29,332

Total

​

$

72,448

​

$

444

​

$

(226)

​

$

72,666

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Amortized

​

Gross Unrecognized

​

Fair

​

    

Cost

    

Gains

    

Losses

    

Value

December 31, 2018

​

​

​

​

​

​

​

​

​

​

​

​

Residential government-sponsored mortgage-backed securities

​

$

9,699

​

$

4

​

$

(230)

​

$

9,473

Obligations of states and political subdivisions

 

​

21,496

 

​

85

 

​

(147)

​

 

21,434

Trust preferred securities

 

​

2,610

 

​

150

 

​

(1)

​

 

2,759

Residential government-sponsored collateralized mortgage obligations

 

​

6,001

 

​

—

 

​

(91)

​

 

5,910

Government-sponsored agency securities

 

​

52,656

 

​

—

 

​

(3,123)

​

 

49,533

Total

​

$

92,462

​

$

239

​

$

(3,592)

​

$

89,109

​

During 2019, $45.1 million and $15.3 million, respectively, of available for sale investment securities and held to maturity investment securities were purchased. No investment securities were sold during 2019. No investment securities were purchased or sold during 2018.

The fair value and carrying amount, if different, of debt investment securities as of December 31, 2019, by contractual maturity were as follows (in thousands). Investment securities not due at a single maturity date are shown separately.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Available for Sale

​

Held to Maturity

​

    

Amortized

    

​

​

    

Amortized

    

​

​

​

​

Cost

​

Fair Value

​

Cost

​

Fair Value

Due in one to five years

​

$

2,327

​

$

2,358

​

$

2,731

​

$

2,804

Due in five to ten years

​

 

12,402

​

 

12,547

​

 

12,241

​

 

12,274

Due after ten years

​

 

21,669

​

 

22,079

​

 

31,423

​

 

31,524

Residential government-sponsored mortgage-backed securities

​

 

48,540

​

 

48,979

​

 

22,925

​

 

22,935

Residential government-sponsored collateralized mortgage obligations

​

 

36,511

​

 

36,689

​

 

3,128

​

 

3,129

Agency commercial mortgage-backed securities

​

 

27,557

​

 

27,731

​

 

—

​

 

—

SBA pool securities

​

 

14,622

​

 

14,437

​

 

—

​

 

—

Total

​

$

163,628

​

$

164,820

​

$

72,448

​

$

72,666

​

Investment securities with a carrying amount of approximately $120.5 million and $165.7 million at December 31, 2019 and 2018, respectively, were pledged to secure public deposits, certain other deposits, a line of credit for advances from the FHLB of Atlanta, and repurchase agreements.

Southern National monitors the portfolio for indicators of OTTI. At December 31, 2019 and 2018, certain investment securities’ fair values were below cost. As outlined in the tables below, there were 59 investment securities with fair values totaling approximately $75.1 million in the portfolio with the carrying value exceeding the estimated fair value that are considered temporarily impaired at December 31, 2019. Because the decline in fair value is attributable to changes in interest rates and market illiquidity, and not credit quality, and because we do not have the intent to sell these investment securities and it is likely that we will not be required to sell the investment securities before their anticipated recovery, management does not consider these investment securities to be other than temporarily impaired as of December 31, 2019.

​

The following tables present information regarding investment securities in a continuous unrealized loss position as of December 31, 2019 and 2018 by duration of time in a loss position (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2019

​

Less than 12 months

​

12 Months or More

​

Total

​

    

Fair

    

Unrealized

    

Fair

    

Unrealized

    

Fair

    

Unrealized

Available for Sale

​

value

​

Losses

​

value

​

Losses

​

value

​

Losses

Residential government-sponsored mortgage-backed securities

​

$

2,686

​

$

(7)

​

$

1,758

​

$

(9)

​

$

4,444

​

$

(16)

Trust preferred securities

​

 

—

​

 

—

​

 

795

​

 

(245)

​

 

795

​

 

(245)

Residential government-sponsored collateralized mortgage obligations

​

 

4,253

​

 

(25)

​

 

3,133

​

 

(14)

​

 

7,386

​

 

(39)

Government-sponsored agency securities

​

 

4,924

​

 

(48)

​

 

—

​

 

—

​

 

4,924

​

 

(48)

Agency commercial mortgage-backed securities

​

 

2,833

​

 

(6)

​

 

3,126

​

 

(12)

​

 

5,959

​

 

(18)

SBA pool securities

​

 

1,148

​

 

(2)

​

 

9,420

​

 

(194)

​

 

10,568

​

 

(196)

Total

​

$

15,844

​

$

(88)

​

$

18,232

​

$

(474)

​

$

34,076

​

$

(562)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2019

​

Less than 12 months

​

12 Months or More

​

Total

​

    

Fair

    

Unrecognized

    

Fair

    

Unrecognized

    

Fair

    

Unrecognized

Held to Maturity

​

value

​

Losses

​

value

​

Losses

​

value

​

Losses

Residential government-sponsored mortgage-backed securities

​

$

14,978

​

$

(41)

​

$

1,402

​

$

(11)

​

$

16,380

​

$

(52)

Obligations of states and political subdivisions

​

 

2,011

​

 

(1)

​

 

—

​

 

—

​

 

2,011

​

 

(1)

Trust preferred securities

​

 

—

​

 

—

​

 

53

​

 

(2)

​

 

53

​

 

(2)

Residential government-sponsored collateralized mortgage obligations

​

 

1,162

​

 

(3)

​

 

571

​

 

(6)

​

 

1,733

​

 

(9)

Government-sponsored agency securities

​

 

—

​

 

—

​

 

20,833

​

 

(162)

​

 

20,833

​

 

(162)

Total

​

$

18,151

​

$

(45)

​

$

22,859

​

$

(181)

​

$

41,010

​

$

(226)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2018

​

Less than 12 months

​

12 Months or More

​

Total

​

    

Fair

    

Unrealized

    

Fair

    

Unrealized

    

Fair

    

Unrealized

Available for Sale

​

value

​

Losses

​

value

​

Losses

​

value

​

Losses

Residential government-sponsored mortgage-backed securities

​

$

393

​

$

(5)

​

$

26,910

​

$

(638)

​

$

27,303

​

$

(643)

Obligations of states and political subdivisions

​

​

2,220

​

 

(78)

​

 

13,385

​

 

(202)

​

 

15,605

​

 

(280)

Corporate securities

​

​

1,008

​

​

(1)

​

​

—

​

​

—

​

​

1,008

​

​

(1)

Trust preferred securities

​

 

—

​

 

—

​

 

795

​

 

(304)

​

 

795

​

 

(304)

Residential government-sponsored collateralized mortgage obligations

​

​

—

​

 

—

​

 

42,598

​

 

(1,041)

​

 

42,598

​

 

(1,041)

Government-sponsored agency securities

​

​

—

​

 

—

​

 

3,125

​

 

(122)

​

 

3,125

​

 

(122)

Agency commercial mortgage-backed securities

​

​

—

​

 

—

​

 

27,304

​

 

(765)

​

 

27,304

​

 

(765)

SBA pool securities

​

​

6,009

​

 

(70)

​

 

10,546

​

 

(238)

​

 

16,555

​

 

(308)

Total

​

$

9,630

​

$

(154)

​

$

124,663

​

$

(3,310)

​

$

134,293

​

$

(3,464)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2018

​

Less than 12 months

​

12 Months or More

​

Total

​

    

Fair

    

Unrecognized

    

Fair

    

Unrecognized

    

Fair

    

Unrecognized

Held to Maturity

​

value

​

Losses

​

value

​

Losses

​

value

​

Losses

Residential government-sponsored mortgage-backed securities

​

$

—

​

$

—

​

$

8,935

​

$

(230)

​

$

8,935

​

$

(230)

Obligations of states and political subdivisions

​

 

3,273

​

 

(10)

​

 

7,187

​

 

(137)

​

 

10,460

​

 

(147)

Trust preferred securities

​

 

—

​

 

—

​

 

60

​

 

(1)

​

 

60

​

 

(1)

Residential government-sponsored collateralized mortgage obligations

​

 

—

​

 

—

​

 

5,910

​

 

(91)

​

 

5,910

​

 

(91)

Government-sponsored agency securities

​

 

—

​

 

—

​

 

49,532

​

 

(3,123)

​

 

49,532

​

 

(3,123)

Total

​

$

3,273

​

$

(10)

​

$

71,624

​

$

(3,582)

​

$

74,897

​

$

(3,592)

​

As of December 31, 2019, we owned pooled trust preferred investment securities as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

% of

​

Previously

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Current

​

Recognized

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Defaults and

​

Cumulative

​

​

​

​

Ratings When

​

​

​

​

​

​

​

Estimated

​

Deferrals to

​

Other

​

​

Tranche

​

Purchased

​

Current Ratings

​

Par

​

Book

​

Fair

​

Total

​

Comprehensive

Security

    

Level

    

Moody's

    

Fitch

    

Moody's

    

Fitch

    

Value

    

Value

    

Value

    

Collateral

    

Loss (1)

Held to Maturity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

ALESCO VII A1B

 

Senior

 

Aaa

 

AAA

 

Aa1

 

AA

​

$

2,019

​

$

1,882

​

$

1,982

 

17

%  

$

219

MMCF III B

 

Senior Sub

 

A3

 

A-

 

Ba1

 

WD

​

 

57

​

 

56

​

 

53

 

45

%  

 

4

​

 

  

 

  

 

  

 

  

 

  

​

$

2,076

​

$

1,938

​

$

2,035

 

  

​

$

223

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Available for Sale

 

  

 

  

 

  

 

  

 

  

​

 

  

​

 

  

​

 

  

 

  

​

Cumulative OTTI

Other Than

 

  

 

  

 

  

 

  

 

  

​

 

  

​

 

  

​

 

  

 

  

​

Related to

Temporarily Impaired:

 

  

 

  

 

  

 

  

 

  

​

 

  

​

 

  

​

 

  

 

  

​

Credit Loss (2)

TPREF FUNDING II

 

Mezzanine

 

A1

 

A-

 

Caa3

 

WD

​

$

1,500

​

$

1,040

​

$

795

 

32

%  

$

400

ALESCO V C1

 

Mezzanine

 

A2

 

A

 

Caa1

 

C

​

 

2,150

​

​

1,490

​

​

1,773

 

15

%  

 

660

​

 

  

 

  

 

  

 

  

 

  

​

$

3,650

​

$

2,530

​

$

2,568

 

  

​

$

1,060

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total

 

  

 

  

 

  

 

  

 

  

​

$

5,726

​

$

4,468

​

$

4,603

 

  

​

 

  

(1)Pre-tax, and represents unrealized losses at date of transfer from available for sale to held to maturity, net of accretion
(2)Pre-tax

Each of these investment securities has been evaluated for OTTI. In performing a detailed cash flow analysis of each investment security, Sonabank works with independent third parties to estimate expected cash flows and assist with the evaluation of OTTI. The cash flow analyses performed included the following assumptions:

●0.5% of the remaining performing collateral will default or defer per annum.
●Recoveries of 9% with a two-year lag on all defaults and deferrals.
●No prepayments for 10 years and then 1% per annum for the remaining life of the investment security.
●Our investment securities have been modeled using the above assumptions by independent third parties using the forward London Inter-bank Offered Rate (“LIBOR”) curve to discount projected cash flows to present values.

The amount of cumulative other than temporary impairment related to credit losses, previously recognized in earnings, was $1,060 at December 31, 2019, 2018 and 2017. There were no other than temporary impairment charges related to credit losses or sales of these securities during the years ended December 31, 2019, 2018 or 2017.

Changes in accumulated other comprehensive (loss) by component for the years ended December 31, 2019, 2018 and 2017 are shown in the table below. All amounts are net of tax (in thousands).

​

​

​

​

​

​

​

​

​

​

​

​

Unrealized Holding

​

​

​

​

​

​

​

​

Gains (Losses) on

​

Held to Maturity

​

​

​

For the year ended December 31, 2019

    

Available for Sale

    

Securities

    

Total

Beginning balance

​

$

(2,419)

​

$

(170)

​

$

(2,589)

Current period other comprehensive income

​

 

3,362

​

 

10

​

 

3,372

Ending balance

​

$

943

​

$

(160)

​

$

783

​

​

​

​

​

​

​

​

​

​

​

​

​

Unrealized Holding

​

​

​

​

​

​

​

​

Losses on

​

Held to Maturity

​

​

​

For the year ended December 31, 2018

​

Available for Sale

​

Securities

​

Total

Beginning balance

​

$

(999)

​

$

(153)

​

$

(1,152)

Amounts reclassified from accumulated other comprehensive loss due to the adoption of ASU 2018-02

​

 

(199)

​

 

(30)

​

 

(229)

Subtotal

​

​

(1,198)

​

​

(183)

​

​

(1,381)

Current period other comprehensive (loss) income

​

 

(1,221)

​

 

13

​

 

(1,208)

Ending balance

​

$

(2,419)

​

$

(170)

​

$

(2,589)

​

​

​

​

​

​

​

​

​

​

​

​

​

Unrealized Holding

​

​

​

​

​

​

​

​

Losses on

​

Held to Maturity

​

​

​

For the year ended December 31, 2017

​

Available for Sale

​

Securities

​

Total

Beginning balance

​

$

(627)

​

$

(162)

​

$

(789)

Other comprehensive loss before reclassifications

​

 

(372)

​

 

(246)

​

 

(618)

Amounts reclassified from accumulated other comprehensive loss

​

 

—

​

 

255

​

 

255

Net current period other comprehensive income (loss)

​

​

(372)

​

​

9

​

​

(363)

Ending balance

​

$

(999)

​

$

(153)

​

$

(1,152)

​