Investment Securities

6 Months Ended

Jun. 30, 2023

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 June 30, 2023 and December 31, 2022.

(Dollars in thousands)	Amortized Cost		Gross Unrealized / Unrecognized Gains		Gross Unrealized / Unrecognized Losses			Estimated Fair Value
At June 30, 2023:
Mortgage backed securities	$	16,849	$	13	$	(856	)	$	16,006
Government agencies		29,862		—		(1,001	)		28,861
Total available for sale securities	$	46,711	$	13	$	(1,857	)	$	44,867
Mortgage backed securities	$	59,002	$	34	$	(7,163	)	$	51,873
Government agencies		3,077		—		(577	)		2,500
Corporate bonds		44,183		—		(4,419	)		39,764
Total held to maturity securities, net	$	106,262	$	34	$	(12,159	)	$	94,137
At December 31, 2022:
Mortgage backed securities	$	18,629	$	26	$	(897	)	$	17,758
Government agencies		29,809		—		(1,043	)		28,766
Corporate bonds		430		58		—			488
Total available for sale securities	$	48,868	$	84	$	(1,940	)	$	47,012
Mortgage backed securities	$	61,363	$	—	$	(7,647	)	$	53,716
Government agencies		3,083		—		(627	)		2,456
Corporate bonds		44,420		30		(3,739	)		40,711
Total held to maturity securities	$	108,866	$	30	$	(12,013	)	$	96,883

The Company did not purchase any investment securities during the six months ended June 30, 2023. The Company purchased 8 available for sale securities for $36.0 million and 11 held to maturity securities for $42.8 million during the six months ended June 30, 2022. The Company did not sell any investment securities during the six months ended June 30, 2023 and 2022.

The following table summarizes the scheduled maturities of our available for sale and held to maturity investment securities as of June 30, 2023.

	Available for Sale				Held to Maturity
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Less that one year	$	16,711	$	16,404	$	10,523	$	10,547
One to five years		19,887		19,109		20,626		19,927
Five to ten years		—		—		24,178		21,146
Beyond ten years		1,589		1,482		20,692		16,475
Securities not due at a single maturity date		8,524		7,872		30,243		26,042
Total investment securities	$	46,711	$	44,867	$	106,262	$	94,137

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, certain securities are not included in the specific maturity categories above and instead are shown separately as securities not due at a single maturity date.

Management monitors the credit quality of the investment portfolio through the use of credit ratings by major credit agencies and analysis of issuer financial information, if available. Additionally, securities issued by government-sponsored agencies, such as FNMA, FHLMC and SBA, have explicit credit guarantees by the United States Federal Government which protect us from credit losses on the contractual cash flows of the securities. The following table reflects the amortized cost and fair value of available for sale and held to maturity securities as of June 30, 2023, aggregated by credit quality indicators.

	Available for Sale				Held to Maturity
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Aaa	$	29,862	$	28,861	$	11,685	$	9,544
Aa1/Aa2/Aa3		—		—		3,077		2,501
A1/A2		—		—		7,978		6,583
BBB		—		—		1,592		1,213
Not rated		16,849		16,006		81,930		74,296
Total investment securities	$	46,711	$	44,867	$	106,262	$	94,137

At June 30, 2023 and December 31, 2022, the Company had 55 securities in an unrealized position. The following table summarizes the unrealized losses for those investment securities, at the respective reporting dates, 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 June 30, 2023:
Mortgage backed securities	$	796	$	(53	)	$	13,009	$	(803	)	$	13,805	$	(856	)
Government agencies		—		—			28,860		(1,001	)		28,860		(1,001	)
Total available for sale securities	$	796	$	(53	)	$	41,869	$	(1,804	)	$	42,665	$	(1,857	)
Mortgage backed securities	$	—	$	—		$	49,487	$	(7,163	)	$	49,487	$	(7,163	)
Government agencies		—		—			2,501		(577	)		2,501		(577	)
Corporate bonds		4,546		(222	)		35,218		(4,197	)		39,764		(4,419	)
Total held to maturity securities	$	4,546	$	(222	)	$	87,206	$	(11,937	)	$	91,752	$	(12,159	)
At December 31, 2022:
Mortgage backed securities	$	10,920	$	(537	)	$	4,347	$	(360	)	$	15,267	$	(897	)
Government agencies		28,765		(1,043	)		—		—			28,765		(1,043	)
Total available for sale securities	$	39,685	$	(1,580	)	$	4,347	$	(360	)	$	44,032	$	(1,940	)
Mortgage backed securities	$	32,271	$	(5,244	)	$	21,445	$	(2,403	)	$	53,716	$	(7,647	)
Government agencies		—		—			2,456		(627	)		2,456		(627	)
Corporate bonds		14,607		(1,143	)		22,880		(2,596	)		37,487		(3,739	)
Total held to maturity securities	$	46,878	$	(6,387	)	$	46,781	$	(5,626	)	$	93,659	$	(12,013	)

At June 30, 2023, management determined that it did not intend to sell any available for sale investment securities with unrealized losses, and it is unlikely that the Company will be required to sell any of those securities with unrealized losses before recovery of their amortized cost. No allowances for credit losses have been recognized, individually or collectively, on available for sale securities in an unrealized loss position, as management does not believe any of the securities are impaired due to reasons of credit quality at June 30, 2023.

The Company measures expected credit losses on held to maturity securities collectively by major security type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions along with reasonable and supportable forecasts. As of June 30, 2023, the Company determined that an allowance for credit losses of $58,000 was required for held to maturity securities. The allowance for credit losses pertained to corporate bonds and was presented as a reduction to the amortized cost of held to maturity securities outstanding.

The following table presents the balance and activity in the allowance for credit losses on held to maturity securities for the three and six months ended June 30, 2023.

	June 30, 2023
(Dollars in thousands)	Three Months Ended			Six Months Ended
Beginning balance	$	110		$	—
Adoption of new accounting standard		—			110
Provision for credit losses		(52	)		(52	)
Net charge-offs		—			—
Balance at June 31, 2023	$	58		$	58

On a quarterly basis, the Company utilizes a comprehensive risk assessment which includes a rating methodology (PT Score) to identify, measure, and monitor risks associated with our held to maturity loan portfolio. The recovery of provision for credit losses in the second quarter of 2023 was primarily driven by a reduction in the risk of default pertaining to certain securities in the held to maturity portfolio, and was identified as part of the comprehensive quarterly analysis.