Investment Securities

6 Months Ended

Jun. 30, 2022

Investment Securities [Abstract]

Investment Securities

2. INVESTMENT SECURITIES 

The following tables present a summary of the amortized cost, unrealized or unrecognized gains and losses, and fair

value of investment securities at the dates indicated (in thousands):

During the year ended December 31, 2021, a total of

28

 investment securities with an amortized cost basis and fair

value of $

67.6

 million and $

68.7

 million, respectively, were transferred from available-for-sale (“AFS”) to held-to-maturity

(“HTM”). These securities had a net unrealized gain of $

1.1

 million on the date of transfer, with no immediate impact to net

income on the transfer date. The unrealized gain or loss of each security at the date of transfer was retained in accumulated

other comprehensive income (“AOCI”) and in the carrying value of the HTM securities. The net unrealized gains that were

retained in AOCI are being amortized over the remaining life of the transferred securities. For the three months and the six

months ended June 30, 2022, total amortization out of AOCI for net unrealized gains on securities transferred from AFS to

HTM was $

61

 thousand and $

126

 thousand, respectively. Two of these transferred securities totaling $

2.0

 million matured

during the second quarter of 2022.

Gains and losses on the sale of securities are recorded on the trade date and are determined on a specific identification

basis. The following table presents the proceeds, realized gross gains and realized gross losses on sales and calls of AFS

debt securities for the three and six months ended June 30, 2022 and 2021 (in thousands):

The amortized cost and fair value of investment securities, by contractual maturity, are shown below as of the date

indicated (in thousands). Actual maturities may differ from contractual maturities because borrowers may have the right to

call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown

separately.

At June 30, 2022, there were no securities held in the portfolio from any one issuer, in an amount greater than 10% of

total stockholders’ equity other than the United States Government and Government Agencies. All the collateralized

mortgage obligations and mortgage-backed securities are issued by United States sponsored entities at June 30, 2022 and

December 31, 2021.

Information pertaining to investment securities with gross unrealized losses, aggregated by investment category and

length of time that those individual securities have been in a continuous loss position, are presented as of the following

dates (in thousands):

As of June 30, 2022, the unrealized losses associated with $

62.2

 million of investment securities transferred from the

AFS portfolio to the HTM portfolio represent unrealized losses since the date of purchase, independent of the impact

associated with changes in the cost basis upon transfer between portfolios.

The Company performs a review of the investments that have an unrealized loss to determine whether there have been

any changes in the economic circumstance of the security issuer to indicate that the unrealized loss is impaired on an other-

than-temporary (“OTTI”) basis. Management considers several factors in their analysis including (i) the severity and duration

of the impairment, (ii) the credit rating of the security including any downgrade, (iii) the intent to sell the security, or if it is

more likely than not that it will be required to sell the security before recovery , (iv) whether there have been any payment

defaults and (v) the underlying guarantor of the securities.

The company does not consider these investments to be OTTI as the decline in market value is attributable to changes

in market interest rates and not credit quality, and because the Company does not intend to sell the investments before

recovery of its amortized cost basis, which may be maturity, and it is more likely than not that the Company will not be

required to sell the securities before maturity.

Pledged Securities

The Company maintains a master repurchase agreement with a public banking institution for up to $

20.0

 million fully

guaranteed with investment securities upon withdrawal. Any amounts borrowed would be at a variable interest rate based

on prevailing rates at the time funding is requested. As of June 30, 2022, the Company did not have any securities pledged

under this agreement.

The Company is a Qualified Public Depositor (“QPD”) with the state of Florida. As a QPD, the Company has the legal

authority to maintain public deposits from cities, municipalities, and the state of Florida. These public deposits are secured

by securities pledged to the state of Florida at a ratio of

25

% of the outstanding uninsured deposits. The Company must

also maintain a minimum amount of pledged securities to be in the public funds program.

As of June 30, 2022, the Company had a total of $

93.7

 million in deposits under the public funds program and pledged

to the state of Florida for these public funds were

fourteen

 corporate bonds with an aggregate fair value of $

23.6

 million.

As of December 31, 2021, the Company had a total of $

37.3

 million in deposits under the public funds program and

pledged to the state of Florida for these public funds were

eleven

 corporate bonds with an aggregate fair value of

$

20.4

 million.

June 30, 2022

Available-for-sale:

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Fair Value

U.S. Government Agency

$

27,816

$

-

$

(1,966)

$

25,850

U.S. Treasury

2,468

-

(31)

2,437

Collateralized mortgage obligations

155,340

-

(21,520)

133,820

Mortgage-backed securities - residential

111,708

-

(15,726)

95,982

Mortgage-backed securities - commercial

44,670

-

(4,549)

40,121

Municipal securities

25,124

-

(5,522)

19,602

Bank subordinated debt securities

16,503

53

(584)

15,972

Corporate bonds

6,062

-

(382)

5,680

$

389,691

$

53

$

(50,280)

$

339,464

Held-to-maturity:

U.S. Government Agency

$

34,100

$

-

$

(4,692)

$

29,408

Collateralized mortgage obligations

40,806

-

(5,513)

35,293

Mortgage-backed securities - residential

27,478

-

(3,954)

23,524

Mortgage-backed securities - commercial

3,095

-

(403)

2,692

Corporate bonds

11,192

-

(1,042)

10,150

$

116,671

$

-

$

(15,604)

$

101,067

December 31, 2021

Available-for-sale:

Amortized

Cost

Unrealized

Gains

Unrealized

Losses

Fair Value

U.S. Government Agency

$

10,564

$

6

$

(50)

$

10,520

Collateralized mortgage obligations

160,506

22

(3,699)

156,829

Mortgage-backed securities - residential

120,643

228

(2,029)

118,842

Mortgage-backed securities - commercial

49,905

820

(608)

50,117

Municipal securities

25,164

6

(894)

24,276

Bank subordinated debt securities

27,003

1,418

(13)

28,408

Corporate bonds

12,068

482

-

12,550

$

405,853

$

2,982

$

(7,293)

$

401,542

Held-to-maturity:

U.S. Government Agency

$

34,505

$

14

$

(615)

$

33,904

Collateralized mortgage obligations

44,820

-

(1,021)

43,799

Mortgage-backed securities - residential

26,920

-

(568)

26,352

Mortgage-backed securities - commercial

3,103

-

(90)

3,013

Corporate bonds

13,310

-

(221)

13,089

$

122,658

$

14

$

(2,515)

$

120,157

Three Months Ended June 30,

Six Months Ended June 30,

Available-for-sale:

2022

2021

2022

2021

Proceeds from sale and call of securities

$

17,280

$

29,018

$

31,838

$

43,266

Gross gains

$

58

$

363

$

216

$

438

Gross losses

(61)

(176)

(198)

(189)

Net realized gain (loss)

$

(3)

$

187

$

18

$

249

Available-for-sale

Held-to-maturity

June 30, 2022:

Amortized

Cost

Fair Value

Amortized

Cost

Fair Value

Due after one year through five years

$

8,530

$

8,117

$

11,192

$

10,150

Due after five years through ten years

17,503

16,822

-

-

Due after ten years

24,124

18,752

-

-

U.S. Government Agency

27,816

25,850

34,100

29,408

Collateralized mortgage obligations

155,340

133,820

40,806

35,293

Mortgage-backed securities - residential 

111,708

95,982

27,478

23,524

Mortgage-backed securities - commercial 

44,670

40,121

3,095

2,692

$

389,691

$

339,464

$

116,671

$

101,067

June 30, 2022

Less than 12 months

12 months or more

Total

Fair Value

Unrealized

Losses

Fair Value

Unrealized

Losses

Fair Value

Unrealized

Losses

U.S. Government Agency

$

40,053

$

(3,976)

$

15,205

$

(2,787)

$

55,258

$

(6,763)

U.S. Treasury

2,437

(31)

-

-

2,437

(31)

Collateralized mortgage obligations

100,414

(14,042)

68,699

(12,991)

169,113

(27,033)

Mortgage-backed securities - residential

77,724

(10,426)

41,782

(8,927)

119,506

(19,353)

Mortgage-backed securities - commercial

36,712

(3,830)

6,101

(1,057)

42,813

(4,887)

Municipal securities 

6,050

(1,560)

13,552

(3,962)

19,602

(5,522)

Bank subordinated debt securities

11,919

(584)

-

-

11,919

(584)

Corporate bonds

15,830

(859)

-

-

15,830

(859)

$

291,139

$

(35,308)

$

145,339

$

(29,724)

$

436,478

$

(65,032)

December 31, 2021

Less than 12 months

12 months or more

Total

Fair Value

Unrealized

Losses

Fair Value

Unrealized

Losses

Fair Value

Unrealized

Losses

U.S. Government Agency

$

25,951

$

(254)

$

15,477

$

(516)

$

41,428

$

(770)

Collateralized mortgage obligations

155,668

(3,223)

38,459

(1,497)

194,127

(4,720)

Mortgage-backed securities - residential

88,772

(1,178)

37,373

(1,274)

126,145

(2,452)

Mortgage-backed securities - commercial

25,289

(318)

7,507

(309)

32,796

(627)

Municipal securities 

11,292

(395)

11,978

(499)

23,270

(894)

Bank subordinated debt securities

4,487

(13)

-

-

4,487

(13)

$

311,459

$

(5,381)

$

110,794

$

(4,095)

$

422,253

$

(9,476)