Securities

3 Months Ended

Mar. 31, 2022

Investments, Debt and Equity Securities [Abstract]

The following table summarizes the amortized cost, the corresponding amounts of gross unrealized gains and losses, and estimated fair value of available-for-sale ("AFS") debt securities as of March 31, 2022 and December 31, 2021:



	March 31, 2022
($ in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Government agencies or sponsored agency securities:
Residential mortgage-backed securities	$	42,907	$	5	$	(2,216)	$	40,696
Residential collateralized mortgage obligations	128,612		5		(8,131)		120,486
Total AFS debt securities	$	171,519	$	10	$	(10,347)	$	161,182



	December 31, 2021
($ in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Government agencies or sponsored agency securities:
Residential mortgage-backed securities	$	37,555	$	178	$	(321)	$	37,412
Residential collateralized mortgage obligations	114,588		253		(1,809)		113,032
Total AFS debt securities	$	152,143	$	431	$	(2,130)	$	150,444

There were no sales of AFS debt securities during the three months ended March 31, 2022 and 2021. The amortized cost and estimated fair value of AFS debt securities as of March 31, 2022, by contractual maturity, are shown below:



($ in thousands)	Amortized Cost		Fair Value
After one year through five years	$	991	$	994
After five years through ten years	3,653		3,593
After ten years	166,875		156,595
Total AFS debt securities	$	171,519	$	161,182

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. As of March 31, 2022 and 2021, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.

The following table presents the fair value and the associated gross unrealized losses on AFS debt securities by length of time those individual securities in each category have been in a continuous loss as of March 31, 2022 and December 31, 2021:



	March 31, 2022
	Less Than 12 Months				12 Months or Longer				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Government agencies or sponsored agency securities:
Residential mortgage-backed securities	$	33,981	$	(1,788)	$	5,358	$	(428)	$	39,339	$	(2,216)
Residential collateralized mortgage obligations	93,604		(5,750)		23,936		(2,381)		117,540		(8,131)
Total AFS debt securities	$	127,585	$	(7,538)	$	29,294	$	(2,809)	$	156,879	$	(10,347)



	December 31, 2021
	Less Than 12 Months				12 Months or Longer				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Government agencies or sponsored agency securities:
Residential mortgage-backed securities	$	31,120	$	(321)	$	—	$	—	$	31,120	$	(321)
Residential collateralized mortgage obligations	93,607		(1,578)		7,212		(231)		100,819		(1,809)
Total AFS debt securities	$	124,727	$	(1,899)	$	7,212	$	(231)	$	131,939	$	(2,130)

Management evaluates securities for other-than-temporary impairment (“OTTI”) on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, along with the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or whether it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components, as follows: (i) OTTI related to credit loss, which must be recognized in the income statement, and (ii) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis.

The unrealized losses were primarily attributable to interest rate movement, not credit quality. These securities (Fannie Mae, Ginnie Mae, and Freddie Mac) are guaranteed or sponsored by agencies of the U.S. government, and the issuers of the securities are of high credit quality. The Company believes that the gross unrealized losses presented in the previous tables are temporary and no credit losses are expected. As a result, the Company expects full collection of the carrying amount of these securities, does not intend to sell the securities in an unrealized loss position, and it was more-likely-than-not the Company will not have to sell these securities prior to recovery of amortized cost. Accordingly, the Company does not consider these securities to be OTTI as of March 31, 2022.

As of March 31, 2022 or December 31, 2021, there were no pledged securities to secure public deposits, borrowing and letters of credit from Federal Home Loan Bank ("FHLB") and the Board of Governors of the Federal Reserve System, and for other purposes required or permitted by law.

The following table presents the other investment securities, which are included in Other investments on the Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021:



($ in thousands)	March 31, 2022		December 31, 2021
FHLB stock	$	7,006	$	7,006
PCBB stock	190		190
Mutual fund - CRA qualified	3,545		3,708
Time deposits placed in other banks	95		95
Total other investments	$	10,836	$	10,999

The Company has equity investment in a mutual fund with readily determinable fair value of $3.5 million and $3.7 million, as of March 31, 2022 and December 31, 2021, respectively, which is measured at fair value with changes in fair value recorded in net income. The Company invested in the mutual fund for CRA purposes. For the mutual fund, the Company recorded a $173 thousand and a $79 thousand unrealized loss for the three months ended March 31, 2022 and 2021, respectively. The unrealized gains (losses) of the mutual fund are included in Other income in the Consolidated Statements of Income.