Investment Securities

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

The amortized cost and estimated fair value of securities available-for-sale and held-to-maturity along with gross unrealized gains and losses are summarized as follows:


(dollars in thousands)
September 30, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Available for Sale:
U.S. treasury securities	$	1,642	$	—	$	(12)	$	1,630
U.S. agency	5,405		—		(487)		4,918
Asset backed securities	26,919		—		(747)		26,172
State, county & municipal securities	126,472		—		(23,182)		103,290
Corporate debt securities	54,782		—		(4,117)		50,665
Mortgage-backed securities	282,269		15		(29,243)		253,041
Total	$	497,489	$	15	$	(57,788)	$	439,716

September 30, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Held to Maturity:
U.S. treasury securities	$	91,189	$	—	$	(4,460)	$	86,729
U.S. agency	16,440		—		(1,853)		14,587
State, county & municipal securities	135,994		—		(21,030)		114,964
Mortgage-backed securities	224,683		—		(29,945)		194,738
Total	$	468,306	$	—	$	(57,288)	$	411,018

December 31, 2021
Securities Available for Sale:
U.S. treasury securities	$	88,638	$	—	$	(1,087)	$	87,551
U.S. agency	17,916		5		(140)		17,781
State, county & municipal securities	252,632		877		(3,356)		250,153
Corporate debt securities	48,153		520		(265)		48,408
Mortgage-backed securities	539,172		2,160		(7,061)		534,271
Total	$	946,511	$	3,562	$	(11,909)	$	938,164

The Company transferred certain agency-issued securities from the available-for-sale to held-to-maturity portfolio on January 1, 2022 and September 1, 2022, having a combined book value of approximately $511.0 million and a combined market value of approximately $477.0 million. As of the date of each transfer, the related pre-tax net unrecognized losses of approximately $34.0 million within the accumulated other comprehensive loss balance are being amortized over the remaining term of the securities using the effective interest method. This transfer was completed after careful consideration of the Company’s intent and ability to hold these securities to maturity. Factors used in assessing the ability to hold these securities to maturity were future liquidity needs and sources of funding.

The amortized cost and fair value of investment securities as of September 30, 2022, by contractual maturity, are shown hereafter. Expected maturities may differ from contractual maturities for certain investments because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. This is often the case with mortgage-backed

securities, which are disclosed separately in the table below.


	Available for Sale				Held to Maturity
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	1,020	$	1,011	$	—	$	—
Due after one year through five years	13,612		12,701		62,300		59,996
Due after five years through ten years	88,747		77,200		87,245		77,143
Due after ten years	111,841		95,763		94,078		79,141
	$	215,220	$	186,675	$	243,623	$	216,280

Mortgage-backed securities	282,269		253,041		224,683		194,738
	$	497,489	$	439,716	$	468,306	$	411,018

Proceeds from the sale of investment securities totaled $44.1 million and $47.2 million, and $0 and $17.6 million for the three and nine months ended September 30, 2022 and 2021, respectively. The sale of investment securities for the three months ended September 30, 2022 and 2021 resulted in no gross realized gains for each period and losses of $96,000 and $0, respectively. The sale of investment securities for the nine months ended September 30, 2022 and 2021 resulted in gross realized gains of $24,000 and $209,000 and losses of $96,000 and $72,000, respectively.

Investment securities having a carrying value of approximately $350.1 million and $247.4 million were pledged to secure public deposits and for other purposes as of September 30, 2022 and December 31, 2021, respectively.

Information pertaining to available-for-sale securities with gross unrealized losses at September 30, 2022 and December 31, 2021 aggregated by investment category and length of time that individual securities have been in a continuous loss position is as follows:


	Less Than 12 Months				12 Months or Greater				Total
(dollars in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
September 30, 2022
U.S. treasury securities	$	841	$	(7)	$	789	$	(5)	$	1,630	$	(12)
U.S. agency	4,918		(487)		—		—		4,918		(487)
Asset backed securities	14,785		(262)		11,387		(485)		26,172		(747)
State, county & municipal securities	50,600		(9,562)		52,690		(13,620)		103,290		(23,182)
Corporate debt securities	26,326		(2,538)		15,086		(1,579)		41,412		(4,117)
Mortgage-backed securities	155,170		(13,980)		82,264		(15,263)		237,434		(29,243)
	$	252,640	$	(26,836)	$	162,216	$	(30,952)	$	414,856	$	(57,788)

December 31, 2021
U.S. treasury securities	$	87,302	$	(1,087)	$	—	$	—	$	87,302	$	(1,087)
U.S. agency	10,969		(140)		—		—		10,969		(140)
State, county & municipal securities	180,551		(3,131)		5,970		(225)		186,521		(3,356)
Corporate debt securities	31,977		(265)		—		—		31,977		(265)
Mortgage-backed securities	377,413		(6,421)		21,129		(640)		398,542		(7,061)
	$	688,212	$	(11,044)	$	27,099	$	(865)	$	715,311	$	(11,909)

Information pertaining to held-to-maturity securities with gross unrealized losses at September 30, 2022 aggregated by investment category and length of time that individual securities have been in a continuous loss position is as follows:


	Less Than 12 Months				12 Months or Greater				Total
(dollars in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
September 30, 2022
U.S. Treasury	$	77,682	$	(4,058)	$	9,047	$	(402,000)	$	86,729	$	(4,460)
U.S. agency	6,235		(489)		8,352		(1,364)		14,587		(1,853)
State, county & municipal securities	47,941		(7,526)		67,023		(13,504)		114,964		(21,030)

Mortgage-backed securities	31,436		(3,299)		163,302		(26,646)		194,738		(29,945)
	$	163,294	$	(15,372)	$	247,724	$	(41,916)	$	411,018	$	(57,288)

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

At September 30, 2022, there were 272 available-for-sale securities and 161 held-to-maturity securities that had unrealized losses. These securities are guaranteed by either the U.S. Government, other governments or U.S. corporations. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. As management has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available-for-sale, no declines are deemed to be other than temporary.