SECURITIES

12 Months Ended

Dec. 31, 2021

SECURITIES

SECURITIES

NOTE 2 — SECURITIES

The amortized cost, related estimated fair value, and unrealized gains and losses for debt securities classified as “available-for-sale” were as follows at December 31, 2021 and 2020:

	Debt Securities Available-for-Sale
(Dollars in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2021:	Cost		Gains		Losses		Value
U.S. Treasury securities	$	7,825	$	—	$	(96)	$	7,729
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgage-backed		116,039		560		(1,688)		114,911
Other		7,636		5		(65)		7,576
Other mortgage backed securities		39,881		99		(430)		39,550
Obligations of state and political subdivisions		175,021		11,709		(554)		186,176
Asset backed securities		36,555		143		(156)		36,542
Corporate debt securities		45,354		448		(370)		45,432
Total	$	428,311	$	12,964	$	(3,359)	$	437,916

	Debt Securities Available-for-Sale
(Dollars in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2020:	Cost		Gains		Losses		Value
U.S. Treasury securities	$	—	$	—	$	—	$	—
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgage-backed		76,270		1,628		(325)		77,573
Other		10,534		2		(106)		10,430
Other mortgage backed securities		39,420		470		(46)		39,844
Obligations of state and political subdivisions		150,922		14,193		(14)		165,101
Asset backed securities		44,751		158		(88)		44,821
Corporate debt securities		28,523		481		(62)		28,942
Total	$	350,420	$	16,932	$	(641)	$	366,711

Debt securities available-for-sale with an aggregate fair value of $401,861,000 at December 31, 2021 and $315,146,000 at December 31, 2020, were pledged to secure public funds, trust funds, securities sold under agreements to repurchase and the Federal Discount Window aggregating $318,074,000 at December 31, 2021 and $231,750,000 at December 31, 2020.

The amortized cost and fair value of securities, by contractual maturity, are shown below at December 31, 2021. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollars in thousands)	Available-for-Sale
	Amortized
	Cost		Fair Value
1 year or less	$	7,687	$	7,778
Over 1 year through 5 years		33,953		35,046
Over 5 years through 10 years		68,075		69,111
Over 10 years		162,676		171,520
Mortgage-backed securities		155,920		154,461
Total	$	428,311	$	437,916

There were no aggregate securities with a single issuer (excluding the U.S. Government and U.S. Government Agencies and Corporations) which exceeded ten percent of consolidated stockholders’ equity at December 31, 2021. The quality rating of the obligations of state and political subdivisions are generally investment grade, as rated by Moody’s, Standard and Poor’s or Fitch. The typical exceptions are local issues which are not rated, but are secured by the full faith and credit obligations of the communities that issued these securities.

Proceeds from sales of investments in debt securities available-for-sale during 2021 and 2020 were $0 and $21,692,000, respectively. Gross gains realized on these sales were $0 and $415,000, respectively. Gross losses on these sales were $0 and $186,000, respectively. There were no impairment losses realized on debt securities available-for-sale during 2021 or 2020.

At December 31, 2021 and 2020, the Corporation had $1,962,000 and $1,646,000, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during 2021 and 2020:

(Dollars in thousands)
	December 31, 2021		December 31, 2020
Net gains and (losses) recognized during the period on equity securities	$	323	$	(287)
Less: Net gains recognized during the period on equity securities sold during the period		(4)		—
Net gains and (losses) recognized during the reporting period on equity securities still held at the reporting date	$	319	$	(287)

The Corporation and its investment advisors monitor the entire portfolio at least quarterly with particular attention given to securities in a continuous loss position of at least ten percent for over twelve months. Based on the factors described above, management did not consider any securities to be other-than-temporarily impaired at December 31, 2021 and 2020.

The summary below shows the gross unrealized losses and fair value of the Corporation’s debt securities, aggregated by investment category, of which individual securities have been in a continuous unrealized loss position for less than 12 months or 12 months or more as of December 31, 2021 and 2020:

December 31, 2021

(Dollars in thousands)	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale:	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury securities	$	7,729	$	(96)	$	—	$	—	$	7,729	$	(96)
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgage-backed		66,195		(1,271)		11,697		(417)		77,892		(1,688)
Other		—		—		6,687		(65)		6,687		(65)
Other mortgage-backed debt securities		11,036		(225)		7,362		(205)		18,398		(430)
Obligations of state and political subdivisions		25,867		(362)		3,931		(192)		29,798		(554)
Asset backed securities		11,232		(49)		6,315		(107)		17,547		(156)
Corporate debt securities		19,485		(315)		3,445		(55)		22,930		(370)
Total	$	141,544	$	(2,318)	$	39,437	$	(1,041)	$	180,981	$	(3,359)

December 31, 2020

(Dollars in thousands)	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale:	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury securities	$	—	$	—	$	—	$	—	$	—	$	—
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgage-backed		13,859		(302)		5,729		(23)		19,588		(325)
Other		2,497		(32)		6,709		(74)		9,206		(106)
Other mortgage-backed debt securities		8,290		(46)		—		—		8,290		(46)
Obligations of state and political subdivisions		4,122		(14)		—		—		4,122		(14)
Asset backed securities		6,827		(8)		11,018		(80)		17,845		(88)
Corporate debt securities		5,489		(11)		1,949		(51)		7,438		(62)
Total	$	41,084	$	(413)	$	25,405	$	(228)	$	66,489	$	(641)

The Corporation invests in various forms of agency debt including residential and commercial mortgage-backed securities and callable debt. The mortgage-backed agency securities are issued by Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”), Government National Mortgage Association (“GNMA”) or SBA. The other mortgage-backed securities consist of private (non-agency) residential and commercial mortgage-backed securities. The municipal securities consist of general obligations and revenue bonds. Asset backed securities consist of bonds backed by consumer loans. Corporate debt securities consist of senior debt and subordinated debt holdings.

The fair market value of the above securities is influenced by market interest rates, prepayment speeds on mortgage securities, bid-offer spreads in the marketplace and credit premiums for various types of agency debt. These factors change continuously and therefore the market value of these securities may be higher or lower than the Corporation’s carrying value at any measurement date. Management does not believe any of their 54 debt securities with a less than one year unrealized loss position, or any of their 21 debt securities with a one year or greater unrealized loss position, as of December 31, 2021, represent an other-than-temporary impairment, as these unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities. The Corporation expects to collect principal and interest payments as defined under the original terms as all contracted payments on securities in the portfolio are current as of December 31, 2021.