Securities

3 Months Ended

Mar. 31, 2022

Securities

Securities

4.Securities

Investments in securities available-for-sale, held-to-maturity, and equity are summarized as follows:

	At March 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gains		Losses		Value
Securities available-for-sale:
Residential mortgage-backed - US agency and Government Sponsored Enterprise ("GSE")	$	30	$	1	$	(1)	$	30
Corporate bonds		20,780		51		(1,742)		19,089
State and political subdivisions		17,241		629		(911)		16,959
Total securities available-for-sale	$	38,051	$	681	$	(2,654)	$	36,078
Securities held-to-maturity:
Residential mortgage-backed - US agency and GSEs	$	1,064	$	15	$	(4)	$	1,075
Total securities held-to-maturity	$	1,064	$	15	$	(4)	$	1,075
Equity securities:
Large cap equity mutual fund	$	44					$	44
Other mutual funds		294						294
Total of equity securities	$	338					$	338

	At December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gains		Losses		Value
Securities available-for-sale:
Residential mortgage-backed - US agency and GSEs	$	33	$	1	$	(1)	$	33
Corporate bonds		18,589		266		(812)		18,043
State and political subdivisions		18,081		887		(69)		18,899
Total securities available-for-sale	$	36,703	$	1,154	$	(882)	$	36,975
Securities held-to-maturity:
Residential mortgage-backed - US agency and GSEs	$	1,128	$	25	$	(3)	$	1,150
Total securities held-to-maturity	$	1,128	$	25	$	(3)	$	1,150
Equity securities:
Large cap equity mutual fund	$	45					$	45
Other mutual funds		305						305
Total of equity securities	$	350					$	350

Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, is as follows:

	At March 31, 2022
	12 Months or Less				More than 12 Months				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses
Securities available-for-sale:
Residential mortgage-backed - US agency and GSEs	$	—	$	—	$	22	$	(1)	$	22	$	(1)
Corporate bonds		15,602		(1,742)		—		—		15,602		(1,742)
State and political subdivisions		6,731		(857)		447		(54)		7,178		(911)
Total securities available-for-sale	$	22,333	$	(2,599)	$	469	$	(55)	$	22,802	$	(2,654)
Securities held-to-maturity:
Residential mortgage-backed - US agency and GSEs	$	214	$	(1)	$	248	$	(3)	$	462	$	(4)
Total securities held-to-maturity	$	214	$	(1)	$	248	$	(3)	$	462	$	(4)

	At December 31, 2021
	12 Months or Less				More than 12 Months				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses
Securities available-for-sale:
Residential mortgage-backed - US agency and GSEs	$	—	$	—	$	23	$	(1)	$	23	$	(1)
Corporate bonds		9,925		(812)		—		—		9,925		(812)
State and political subdivisions		4,774		(69)		—		—		4,774		(69)
Total securities available-for-sale	$	14,699	$	(881)	$	23	$	(1)	$	14,722	$	(882)
Securities held-to-maturity:
Residential mortgage-backed - US agency and GSEs	$	—	$	—	$	156	$	(3)	$	156	$	(3)
Total securities held-to-maturity	$	—	$	—	$	156	$	(3)	$	156	$	(3)

The Company conducts a formal review of investment securities on a quarterly basis for the presence of other-than-temporary impairment (“OTTI”). Management assesses whether OTTI is present when the fair value of a debt security is less than its amortized cost basis at the statement of financial condition date. Under these circumstances, OTTI is considered to have occurred (1) if we intend to sell the security; (2) if it is “more likely than not” we will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not sufficient to recover the entire amortized cost basis.  Credit-related OTTI is recognized in earnings while non-credit-related OTTI on securities not expected to be sold is recognized in other comprehensive income.  Non-credit-related OTTI is based on other factors, including illiquidity. Presentation of OTTI is made in the consolidated statement of operations on a gross basis, including both the portion recognized in earnings as well as the portion recorded in other comprehensive income.

Fourteen government agency and government sponsored enterprise (“GSE”) residential mortgage-backed security holdings have an unrealized loss as of March 31, 2022.  The securities were issued by the Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and the Government National Mortgage Association (“GNMA”).  The government-backed securities that have unrealized losses are immaterial, with each of these securities having value deficiencies of $1,200 or less.  

There are 43 bond issues held by the Bank that have an unrealized loss as of March 31, 2022. The bonds are issued by well-established municipalities and corporate entities with semi-annual interest payments. All interest payments have historically been made timely. The value of the bonds held is closely correlated with long-term interest rates, and as interest rates increase, the bond values decrease. We anticipate full recovery of our investment over time and have no plans to sell the securities in the near term.

Market values of the securities fluctuate in reaction to the uncertainty of the economy.  Principal and interest continue to be received on all securities as anticipated.  The Company has the ability and intent to hold the securities through maturity or recovery of its amortized cost basis.  With the government guarantees in place, management does not expect losses on these securities. No OTTI is deemed present on these securities.

The following is a summary of the amortized cost and estimated fair values of debt securities at March 31, 2022, by remaining term to contractual maturity other than mortgage-backed securities. Actual maturities may differ from these amounts because certain issuers have the right to call or redeem their obligations prior to contractual maturity. The contractual maturities of mortgage-backed securities generally exceed 20 years; however, the effective average life is expected to be substantially shorter due to anticipated repayments and prepayments.

	At March 31, 2022
	Securities				Securities
	Available-for-Sale				Held-to-Maturity
	Amortized		Estimated		Amortized		Estimated
(in thousands)	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	125	$	128	$	—	$	—
Due over one year through five years		1,736		1,686		—		—
Due over five through ten years		5,907		5,828		—		—
Due after ten years		30,253		28,406		—		—
		38,021		36,048		—		—
Residential mortgage-backed securities		30		30		1,064		1,075
Total	$	38,051	$	36,078	$	1,064	$	1,075

There were no gross realized gains (losses) on sales and redemptions of available-for-sale securities for the three months March 31, 2022 and 2021. Gains and losses on the sales of securities are recognized in income when sold, using the specific identification method, on a trade date basis.

Securities with a fair value of $8,665,178 and $8,775,255 were pledged to collateralize certain deposit arrangements at March 31, 2022 and December 31, 2021 respectively.