Investment Securities

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Investment Securities

2. INVESTMENT SECURITIES

The following table summarizes the amortized cost and estimated fair value of securities available for sale and held to maturity at September 30, 2022 and December 31, 2021.

(Dollars in thousands)	Amortized Cost		Gross Unrealized / Unrecognized Gains		Gross Unrealized / Unrecognized Losses			Estimated Fair Value
At September 30, 2022:
Mortgage backed securities	$	19,080	$	21	$	(933	)	$	18,168
Government agencies		29,782		—		(1,068	)		28,714
Corporate bonds		429		48		—			477
Total available for sale securities	$	49,291	$	69	$	(2,001	)	$	47,359
Mortgage backed securities	$	62,525	$	—	$	(8,245	)	$	54,280
Government agencies		3,087		—		(677	)		2,410
Corporate bonds		44,560		31		(3,577	)		41,014
Total held to maturity securities	$	110,172	$	31	$	(12,499	)	$	97,704
At December 31, 2021:
Mortgage backed securities	$	29,943	$	325	$	(320	)	$	29,948
Government agencies		3,093		—		(100	)		2,993
Corporate bonds		41,725		694		(468	)		41,951
Total available for sale securities	$	74,761	$	1,019	$	(888	)	$	74,892
Mortgage backed securities	$	22,772	$	—	$	(140	)	$	22,632
Government agencies		—		—		—			—
Corporate bonds		5,614		—		(30	)		5,584
Total held to maturity securities	$	28,386	$	—	$	(170	)	$	28,216

The Company purchased 8 available for sale securities for $36.0 million and 11 held to maturity securities for $42.8 million during the nine months ended September 30, 2022. The Company purchased 9 available for sale securities for $36.5 million and no held to maturity securities during the nine months ended September 30, 2021. The Company did not sell any securities during the nine months ended September 30, 2022 and September 30, 2021.

Net unrealized losses on available for sale investment securities totaling $1.9 million were recorded, net of deferred tax assets, as accumulated other comprehensive income within shareholders’ equity at September 30, 2022. Net unrealized gains on available for sale investment securities totaling $131,000 were recorded, net of deferred tax liabilities, as accumulated other comprehensive income within shareholders’ equity at December 31, 2021.

During the first quarter of 2022, the Company re-designated certain securities previously classified as available for sale to the held to maturity classification. The securities re-designated consisted of mortgage backed securities and government agencies with a total carrying value of $49.9 million at December 31, 2021. At the time of re-designation the securities included $281,000 of pretax unrealized losses in other comprehensive income which is being amortized over the remaining life of the securities in a manner consistent with the amortization of a premium or discount.

The following table summarizes securities with unrealized losses at September 30, 2022 and December 31, 2021 aggregated by major security type and length of time in a continuous unrealized loss position.

	Less Than 12 Months					More Than 12 Months					Total
(Dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
At September 30, 2022:
Mortgage backed securities	$	11,221	$	(541	)	$	—	$	—		$	11,221	$	(541	)
Government agencies		28,714		(1,068	)		4,434		(392	)		33,148		(1,460	)
Corporate bonds		—		—			—		—			—		—
Total available for sale securities	$	39,935	$	(1,609)		$	4,434	$	(392)		$	44,369	$	(2,001)
Mortgage backed securities	$	51,717	$	(7,767)		$	2,563	$	(478)		$	54,280	$	(8,245)
Government agencies		—		—			2,410		(677)			2,410		(677)
Corporate bonds		20,046		(1,258)			17,748		(2,319)			37,794		(3,577)
Total held to maturity securities	$	71,763	$	(9,025)		$	22,721	$	(3,474)		$	94,484	$	(12,499)
At December 31, 2021:
Mortgage backed securities	$	14,302	$	(320)		$	—	$	—		$	14,302	$	(320)
Government agencies		2,993		(100)			—		—			2,993		(100)
Corporate bonds		15,233		(200)			4,732		(268)			19,965		(468)
Total available for sale securities	$	32,528	$	(620)		$	4,732	$	(268)		$	37,260	$	(888)
Mortgage backed securities	$	22,632	$	(140)		$	—	$	—		$	22,632	$	(140)
Government agencies		5,584		(30)			—		—			5,584		(30)
Corporate bonds		—		—			—		—			—		—
Total held to maturity securities	$	28,216	$	(170)		$	—	$	—		$	28,216	$	(170)

At September 30, 2022 the Company’s investment security portfolio consisted of 60 securities, 55 of which were in an unrealized loss position at quarter end. At December 31, 2021 the Company’s investment security portfolio consisted of 44 securities, 16 of which were in an unrealized loss position at year end. Management believes that changes in the market value since purchase are primarily attributable to changes in interest rates and relative illiquidity. Because the Company does not intend to sell and is unlikely to be required to sell until a recovery of fair value, which may be at maturity, the Company did not consider those investments to be other-than-temporarily impaired at September 30, 2022 and December 31, 2021, respectively.

The following table summarizes the scheduled maturities of the Company’s investment securities as of September 30, 2022.

	Available for Sale				Held to Maturity
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Less that one year	$	—	$	—	$	2,521	$	2,478
One to five years		34,810		33,645		21,080		20,377
Five to ten years		2,141		2,100		32,139		30,049
Beyond ten years		2,512		2,477		21,606		16,811
Securities not due at a single maturity date		9,828		9,137		32,826		27,989
Total investment securities	$	49,291	$	47,359	$	110,172	$	97,704

The amortized cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. As such, mortgage backed securities and government agencies are not included in the maturity categories above and instead are shown separately as securities not due at a single maturity date.