Securities

12 Months Ended

Dec. 31, 2020

Securities [Abstract]

Securities

5. SECURITIES

Equity Securities

Equity securities owned by the Company consist of common stock of various financial services providers (“Bank Stocks”). The Company had $1,091,000 in equity securities recorded at fair value as of December 31, 2020, and $1,144,000 in equity securities recorded at fair value as of December 31, 2019.

During the years ended December 31, 2020 and 2019, the Company recorded a net loss of $53,000 and a net gain of $26,000, respectively, on the consolidated statements of income because of the change in fair value of the Company’s equity securities.

Debt Securities Available for Sale

The Company’s investment portfolio includes primarily mortgage-backed securities issued by U.S. Government sponsored agencies backed by residential mortgages (approximately 85%), bonds issued by U.S. Government sponsored agencies (approximately 8%), corporate debt securities (approximately 4%) and municipalities (approximately 3%) as of December 31, 2020. Most of the municipal bonds are general obligation bonds with maturities or pre-refunding dates within 5 years.

The amortized cost and fair value of debt securities available for sale as of December 31, 2020 and 2019, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the securities may be called or prepaid with or without prepayment penalties.

(Dollars in thousands)	December 31, 2020
					Gross		Gross
	Amortized		Fair		Unrealized		Unrealized
Debt Securities Available for Sale	Cost		Value		Gains		Losses
Type and Maturity
Obligations of U.S. Government sponsored enterprises
After five years but within ten years	$	22,994	$	22,949	$	7	$	(52)
		22,994		22,949		7		(52)
Obligations of state and political subdivisions
Within one year		31		31		—		—
After one year but within five years		4,708		4,767		59		—
After five years but within ten years		3,289		3,484		195		—
		8,028		8,282		254		—
Corporate debt securities
Within one year		1,033		1,039		6		—
After five years but within ten years		10,058		10,484		485		(59)
		11,091		11,523		491		(59)
Mortgage-backed securities		239,793		243,661		3,999		(131)
Total	$	281,906	$	286,415	$	4,751	$	(242)

(Dollars in thousands)	December 31, 2019
					Gross		Gross
	Amortized		Fair		Unrealized		Unrealized
Debt Securities Available for Sale	Cost		Value		Gains		Losses
Type and Maturity
Obligations of U.S. Government sponsored enterprises
After one year but within five years	$	14,998	$	14,970	$	1	$	(29)
After five years but within ten years		6,000		5,950		—		(50)
		20,998		20,920		1		(79)
Obligations of state and political subdivisions
Within one year		1,020		1,024		4		—
After one year but within five years		2,810		2,823		13		—
After five years but within ten years		723		728		5		—
		4,553		4,575		22		—
Mortgage-backed securities		184,488		185,191		1,132		(429)
Total	$	210,039	$	210,686	$	1,155	$	(508)

Certain obligations of the U.S. Government and state and political subdivisions are pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law. The carrying value of the pledged assets was $74,614,000 and $50,365,000 at December 31, 2020 and 2019, respectively.

In addition to cash received from the scheduled maturities of securities, some investment securities available for sale are sold at current market values through normal operations. Following is a summary of proceeds received from all investment securities transactions and the resulting realized gains and losses:

(Dollars in thousands)	Year Ended
	December 31,
	2020		2019
Gross proceeds from sales and calls of securities	$	97,389	$	21,777
Securities available for sale:
Gross realized gains from sold and called securities	$	944	$	67
Gross realized losses from sold and called securities		(89)		(110)
Net gains (losses) from sales and calls of securities	$	855	$	(43)

The following table shows gross unrealized losses and fair values of debt securities available for sale, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2020:

	Unrealized Losses at December 31, 2020
	Less Than 12 Months					12 Months or More					Total
(Dollars in thousands)	Number					Number					Number
	of	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized
	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
Obligations of U.S. Government sponsored enterprises	3	$	18,948	$	(52)	—	$	—	$	—	3	$	18,948	$	(52)
Corporate debt securities	1	$	2,972	$	(59)	—	$	—	$	—	1	$	2,972	$	(59)
Mortgage-backed securities	7		43,583		(131)	—		—		—	7		43,583		(131)
Total temporarily impaired securities	11	$	65,503	$	(242)	—	$	—	$	—	11	$	65,503	$	(242)

At December 31, 2020, three U.S. Government and agency securities, one corporate debt security and seven mortgage-backed securities had unrealized losses. None of these securities were in a continuous loss position for 12 months or more.

The mortgage-backed securities in the Company’s portfolio are government sponsored enterprise (“GSE”) pass-through instruments issued by the Federal National Mortgage Association (“FNMA”), which guarantees the timely payment of principal on these investments.

The unrealized losses noted above are considered temporary impairments. The decline in the values of the debt securities is due only to interest rate fluctuations, rather than erosion of issuer credit quality. As a result, the payment of contractual cash flows, including principal repayment, is not at risk. None of the debt securities are deemed to be other-than-temporarily impaired because the Company does not intend to sell the securities, does not believe it will be required to sell the securities before recovery and expects to recover the entire amortized cost basis.

The following table shows gross unrealized losses and fair values of securities available for sale, aggregated by category and length of time that individual securities had been in a continuous unrealized loss position, at December 31, 2019:

	Unrealized Losses at December 31, 2019
	Less Than 12 Months					12 Months or More					Total
(Dollars in thousands)	Number					Number					Number
	of	Fair		Unrealized		of	Fair		Unrealized		of	Fair		Unrealized
	Securities	Value		Losses		Securities	Value		Losses		Securities	Value		Losses
Obligations of U.S. Government sponsored enterprises	9	$	16,919	$	(79)	—	$	—	$	—	9	$	16,919	$	(79)
Mortgage-backed securities	13		47,466		(204)	16		22,049		(225)	29		69,515		(429)
Total temporarily impaired securities	22	$	64,385	$	(283)	16	$	22,049	$	(225)	38	$	86,434	$	(508)