XML 20 R10.htm IDEA: XBRL DOCUMENT v3.22.2
INVESTMENTS
6 Months Ended
Jun. 30, 2022
INVESTMENTS  
INVESTMENTS

NOTE 2 - INVESTMENTS

The following tables present the amortized costs, unrealized gains, unrealized losses, estimated fair values of securities available-for-sale and held-to-maturity, and ACL at June 30, 2022 and December 31, 2021:

June 30, 2022

    

    

    

    

Estimated

 

Allowance

Amortized 

Unrealized 

Unrealized 

Fair 

 

for Credit

SECURITIES AVAILABLE-FOR-SALE

Cost

Gains

Losses

Values

 

Losses

U.S. agency securities

$

21,154

$

68

$

(2,672)

$

18,550

$

Corporate securities

 

9,496

 

36

 

(764)

 

8,768

Municipal bonds

 

148,363

 

92

 

(21,324)

 

127,131

Mortgage-backed securities

 

85,142

 

77

 

(8,044)

 

77,175

U.S. Small Business Administration securities

 

16,848

 

21

 

(661)

 

16,208

Total securities available-for-sale

281,003

294

(33,465)

247,832

SECURITIES HELD-TO-MATURITY

Corporate securities

8,500

(158)

8,342

(31)

Total securities held-to-maturity

8,500

(158)

8,342

(31)

Total securities

$

289,503

$

294

$

(33,623)

$

256,174

$

(31)

December 31, 2021

    

    

    

    

Estimated

Amortized 

Unrealized

Unrealized

Fair

SECURITIES AVAILABLE-FOR-SALE

Cost

Gains

Losses

Values

U.S. agency securities

$

21,155

$

133

$

(318)

$

20,970

Corporate securities

 

9,495

 

31

 

(524)

 

9,002

Municipal bonds

 

136,377

 

1,577

 

(2,521)

 

135,433

Mortgage-backed securities

 

88,641

 

1,457

 

(696)

 

89,402

U.S. Small Business Administration securities

 

16,383

 

235

 

(66)

 

16,552

Total securities available-for-sale

272,051

3,433

(4,125)

271,359

SECURITIES HELD-TO-MATURITY

Corporate securities

7,500

628

8,128

Total securities held-to-maturity

7,500

628

8,128

Total securities

$

279,551

$

4,061

$

(4,125)

$

279,487

The following table presents the activity in the allowance for credit losses on securities held-to-maturity by major security type for the three and six months ended June 30, 2022:

For the Three Months Ended

For the Six Months Ended

June 30, 2022

    

June 30, 2022

Corporate Securities

Corporate Securities

Beginning allowance balance

$

72

$

Impact of adopting ASU 2016-13

 

 

72

Recapture of provision for credit losses

 

(41)

 

(41)

Securities charged-off

 

 

Recoveries

 

 

Total ending allowance balance

$

31

$

31

Management measures expected credit losses on held-to-maturity debt securities on an individual basis. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Accrued interest receivable on held-to-maturity debt securities totaled $117,000 and $113,000 as of June 30, 2022 and December 31, 2021, respectively and was $1.2 million and $1.1 million on available-for-sale debt securities as of June 30, 2022 and December 31, 2021, respectively.  Accrued interest receivable on securities is reported in accrued interest receivable on the Consolidated Balance Sheets and is excluded from the calculation of the ACL.

The Bank monitors the credit quality of debt securities held-to-maturity quarterly through the use of credit rating, material event notices, and changes in market value. The following table summarizes the amortized cost of debt securities held-to-maturity at June 30, 2022 and December 31, 2021, aggregated by credit quality indicator:

Corporate

June 30, 2022

Securities

BBB/BBB-

$

8,500

December 31, 2021

BBB/BBB-

$

7,500

As of June 30, 2022, there were no debt securities held-to-maturity that were classified as either nonaccrual or 90 days or more past due and still accruing interest.

At June 30, 2022, the Bank pledged seven securities held at the FHLB of Des Moines with a carrying value of $6.4 million to secure Washington State public deposits of $15.7 million with a $6.4 million collateral requirement by the Washington Public Deposit Protection Commission.  

Investment securities that were in an unrealized loss position at June 30, 2022 and December 31, 2021 are presented in the following tables, based on the length of time individual securities have been in an unrealized loss position.

June 30, 2022

Less than 12 Months

12 Months or Longer

Total

    

Fair

    

Unrealized

    

Fair

    

Unrealized

    

Fair

    

Unrealized

SECURITIES AVAILABLE-FOR-SALE

Value

 

Losses

Value

 

Losses

Value

 

Losses

U.S. agency securities

$

13,349

$

(1,837)

$

3,132

$

(835)

$

16,481

$

(2,672)

Corporate securities

1,494

(4)

4,240

(760)

5,734

(764)

Municipal bonds

81,129

(13,146)

39,852

(8,178)

120,981

(21,324)

Mortgage-backed securities

 

68,824

 

(7,451)

 

5,235

(593)

 

74,059

 

(8,044)

U.S. Small Business Administration securities

11,059

(661)

11,059

(661)

Total securities available-for-sale

$

175,855

$

(23,099)

$

52,459

$

(10,366)

$

228,314

$

(33,465)

SECURITIES HELD-TO-MATURITY

Corporate securities

7,342

(158)

7,342

(158)

Total securities held-to-maturity

7,342

(158)

7,342

(158)

Total

$

183,197

$

(23,257)

$

52,459

$

(10,366)

$

235,656

$

(33,623)

December 31, 2021

Less than 12 Months

12 Months or Longer

Total

    

Fair

    

  Unrealized 

    

Fair

    

 Unrealized 

    

Fair

    

 Unrealized 

SECURITIES AVAILABLE-FOR-SALE

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

U.S. agency securities

$

13,125

$

(105)

$

3,752

$

(213)

$

16,877

$

(318)

Corporate securities

 

 

 

5,476

 

(524)

 

5,476

 

(524)

Municipal bonds

72,098

(1,961)

14,116

(560)

86,214

(2,521)

Mortgage-backed securities

 

33,291

 

(620)

 

3,825

 

(76)

 

37,116

 

(696)

U.S. Small Business Administration securities

 

2,988

 

(66)

 

 

 

2,988

 

(66)

Total securities available-for-sale

$

121,502

$

(2,752)

$

27,169

$

(1,373)

$

148,671

$

(4,125)

There were six held-to-maturity debt securities with unrealized losses less than one year and none with unrealized losses of more than one year at June 30, 2022.  There were no held-to-maturity debt securities in an unrealized loss position as of December 31, 2021.

There were 148 available-for-sale securities with unrealized losses of less than one year, and 39 available-for-sale securities with an unrealized loss of more than one year at June 30, 2022. There were 75 available-for-sale securities with unrealized losses of less than one year, and 17 available-for-sale securities with an unrealized loss of more than one year at December 31, 2021. The unrealized losses associated with these securities are believed to be caused by changing market conditions that are considered to be temporary and the Company does not intend to sell the securities, and it is not likely to be required to sell these securities prior to maturity.  Management monitors the published credit ratings of the issuers of the debt securities for material ratings or outlook changes.  Substantially, all of the Company’s municipal bond portfolio is comprised of obligations of states and political subdivisions located within the Company’s geographic footprint that are monitored through quarterly or annual financial review.  

All of the available-for-sale mortgage-backed securities and U.S. Small Business Administration securities in an unrealized loss position are issued or guaranteed by government-sponsored enterprises, and the available-for-sale corporate securities are all investment grade and monitored for rating or outlook changes. Based on the Company’s evaluation of these securities, no credit impairment was recorded for the six months ended June 30, 2022, or for the year ended December 31, 2021.

The contractual maturities of securities available-for-sale and held-to-maturity at June 30, 2022 and December 31, 2021 are listed below. Expected maturities of mortgage-backed securities may differ from contractual maturities because

borrowers may have the right to call or prepay the obligations; therefore, these securities are classified separately with no specific maturity date.

June 30, 2022

December 31, 2021

SECURITIES AVAILABLE-FOR-SALE

    

Amortized

    

Fair

    

Amortized

    

Fair

U.S. agency securities

Cost

Value

Cost

Value

Due after one year through five years

$

950

$

948

$

959

$

1,004

Due after five years through ten years

6,927

6,229

6,920

6,850

Due after ten years

13,277

11,373

13,276

13,116

Subtotal

 

21,154

 

18,550

 

21,155

 

20,970

Corporate securities

 

  

 

  

 

  

 

  

Due within one year

 

1,000

 

1,005

 

 

Due after one year through five years

 

2,496

 

2,523

 

3,495

 

3,526

Due after five years through ten years

4,000

3,788

4,000

3,627

Due after ten years

2,000

1,452

2,000

1,849

Subtotal

 

9,496

 

8,768

 

9,495

 

9,002

Municipal bonds

 

  

 

  

 

  

 

  

Due within one year

 

2,660

 

2,653

 

 

Due after one year through five years

 

1,051

 

1,047

 

3,724

 

3,850

Due after five years through ten years

 

8,013

 

7,729

 

6,857

 

7,035

Due after ten years

 

136,639

 

115,702

 

125,796

 

124,548

Subtotal

 

148,363

 

127,131

 

136,377

 

135,433

Mortgage-backed securities

 

  

 

  

 

  

 

  

Federal National Mortgage Association (“FNMA”)

 

70,871

 

63,653

 

75,171

 

75,737

Federal Home Loan Mortgage Corporation (“FHLMC”)

 

9,395

 

8,920

 

9,606

 

9,768

Government National Mortgage Association (“GNMA”)

 

4,876

 

4,602

 

3,864

 

3,897

Subtotal

 

85,142

 

77,175

 

88,641

 

89,402

U.S. Small Business Administration securities

 

  

 

  

 

  

 

  

Due after one year through five years

 

3,423

 

3,285

 

2,485

 

2,507

Due after five years through ten years

4,805

4,661

4,420

4,515

Due after ten years

8,620

8,262

9,478

9,530

Subtotal

16,848

16,208

16,383

16,552

Total securities available-for-sale

281,003

247,832

272,051

271,359

SECURITIES HELD-TO-MATURITY

Corporate securities

Due after five years through ten years

8,500

8,342

7,500

8,128

Total securities held-to-maturity

8,500

8,342

7,500

8,128

Total securities

$

289,503

$

256,174

$

279,551

$

279,487

There were no sales proceeds, gains or losses from the sale of securities available-for-sale for both the three and six months ended June 30, 2022 and 2021.