Investment and Equity Securities

3 Months Ended

Mar. 31, 2022

Investments Debt And Equity Securities [Abstract]

Note 5 – Investment and Equity Securities

Carrying amounts and fair values of securities available for sale and held to maturity are summarized below:

March 31, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities available for sale
U.S. Treasury	$	31,410	$	—	$	2,021	$	29,389
U.S. Government agencies		42,290		70		685		41,675
GSE - Mortgage-backed securities and CMOs		124,749		5		7,678		117,076
Asset-backed securities		42,161		318		218		42,261
State and political subdivisions		93,383		51		9,360		84,074
Corporate bonds		8,000		2		209		7,793
Total securities available for sale	$	341,993	$	446	$	20,171	$	322,268

March 31, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities held to maturity
U.S. Government agencies	$	152	$	—	$	3	$	149
State and political subdivisions		15,570		14		363		15,221
Corporate bonds		15,000		30		491		14,539
Total securities held to maturity	$	30,722	$	44	$	857	$	29,909

December 31, 2021	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities available for sale
U.S. Treasury	$	26,675	$	16	$	310	$	26,381
U.S. Government agencies		40,066		172		426		39,812
GSE - Mortgage-backed securities and CMOs		121,994		190		1,736		120,448
Asset-backed securities		43,383		875		60		44,198
State and political subdivisions		89,786		892		1,201		89,477
Corporate bonds		9,928		148		55		10,021
Total securities available for sale	$	331,832	$	2,293	$	3,788	$	330,337

December 31, 2021	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Securities held to maturity
U.S. Government agencies	$	175	$	1	$	—	$	176
State and political subdivisions		15,626		1,096		—		16,722
Corporate bonds		15,000		196		49		15,147
Total securities held to maturity	$	30,801	$	1,293	$	49	$	32,045

The Company owned Federal Reserve Bank (FRB) stock reported at cost of $959,000 and $509,000 at March 31, 2022 and December 31, 2021, respectively. The Company owned Federal Home Loan Bank (FHLB) stock reported at cost of $469,000 and $411,000 at March 31, 2022 and December 31, 2021, respectively. The investments in FRB stock and FHLB stock are required investments related to the Company’s membership in, and borrowings with, these banks and is classified as restricted stock on the consolidated balance sheet. These investments are carried at cost since there is no ready market and redemption has historically been made at par value. The Company estimated that the fair value approximated cost and that these investments were not impaired at March 31, 2022.

Results from sales of securities available for sale for the three-month periods ended March 31, 2022 and March 31, 2021 are as follows:

	Three Months Ended March 31,
	2022			2021
	(dollars in thousands)
Gross proceeds from sales	$	8,398		$	34,237

Realized gains from sales	$	52		$	1,454
Realized losses from sales		143			514
Net realized gains (losses)	$	(91	)	$	940

At March 31, 2022 and December 31, 2021, securities available for sale with a carrying amount of $104.3 million and $104.9 million, respectively, were pledged as collateral on public deposits and for other purposes as required or permitted by law.

The following tables show the gross unrealized losses and fair value of investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2022 and December 31, 2021. We believe these unrealized losses on investment securities are a result of a volatile market and fluctuations in market prices due to a rise in interest rates, which will adjust if rates decline. Management does not believe these fluctuations are a reflection of the credit quality of the investments. At March 31, 2022, the unrealized losses on available for sale securities less than twelve months related to six U.S. Treasury bonds, ten government agency bonds, forty-six government-sponsored enterprise (GSE) mortgage-backed securities, eleven asset-backed securities, forty-four state and political subdivision bonds and three corporate bonds. Unrealized losses on held to maturity securities related to one government agency bond, thirteen corporate bonds and five state and political subdivision bonds that had been in a loss position less than twelve months at March 31, 2022. At December 31, 2021, the unrealized losses on available for sale securities less than twelve months related to three U.S. Treasury bonds, fourteen government agency bonds, thirty GSE mortgage-backed securities, five asset-backed securities and thirty-four state and political subdivision bonds and three corporate bonds. There were eight corporate held to maturity bonds that had been in a loss position less than twelve months at December 31, 2021. At

March 31, 2022, the Company had ten government agency bonds, three GSE mortgage-backed securities and twelve state and political subdivision bonds that had been in a loss position for twelve months or more. The Company had two government agency bonds, one GSE mortgage-backed security and nine state and political subdivision bonds that had been in a loss position for more than twelve months at December 31, 2021.

	Less than 12 Months				12 Months or More				Total
March 31, 2022	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Securities available for sale temporary impairment
U.S. Treasury	$	31,410	$	2,021	$	—	$	—	$	31,410	$	2,021
U.S. Government agencies		14,335		383		10,944		302		25,279		685
GSE-Mortgage-backed securities and CMOs		105,231		7,084		12,421		594		117,652		7,678
Asset-backed securities		19,525		218		—		—		19,525		218
State and political subdivisions		72,790		7,371		13,566		1,989		86,356		9,360
Corporate bonds		6,000		209		—		—		6,000		209
Total securities available for sale	$	249,291	$	17,286	$	36,931	$	2,885	$	286,222	$	20,171

	Less than 12 Months				12 Months or More				Total
March 31, 2022	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Securities held to maturity temporary impairment
U.S. Government agencies		152		3		—		—		152		3
State and political subdivisions		11,750		363		—		—		11,750		363
Corporate bonds		12,000		491		—		—		12,000		491
Total securities held to maturity	$	23,902	$	857	$	—	$	—	$	23,902	$	857

	Less than 12 Months				12 Months or More				Total
December 31, 2021	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Securities available for sale temporary impairment
U.S. Treasury	$	16,306	$	310	$	—	$	—	$	16,306	$	310
U.S. Government agencies		19,702		396		2,313		30		22,015		426
GSE-Mortgage-backed securities and CMOs		93,928		1,607		4,210		129		98,138		1,736
Asset-backed securities		8,531		60		—		—		8,531		60
State and political subdivisions		52,959		892		9,272		309		62,231		1,201
Corporate bonds		5,945		55		—		—		5,945		55
Total securities available for sale	$	197,371	$	3,320	$	15,795	$	468	$	213,166	$	3,788

	Less than 12 Months				12 Months or More				Total
December 31, 2021	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(dollars in thousands)
Securities held to maturity temporary impairment
U.S. Government agencies	$	—	$	—	$	—	$	—	$	—	$	—
State and political subdivisions		—		—		—		—		—		—
Corporate bonds		5,201		49		—		—		5,201		49
Total securities held to maturity	$	5,201	$	49	$	—	$	—	$	5,201	$	49

Declines in the fair value of the investment portfolio are believed by management to be temporary in nature. When evaluating an investment for other-than-temporary impairment, management considers, among other things, the length of time and the extent to which the fair value has been in a loss position, the financial condition of the issuer and the intent and the ability of the Company to hold the investment until the loss position is recovered.

Any unrealized losses were largely due to increases in market interest rates over the yields available at the time of purchase. The fair value is expected to recover as the bonds approach their maturity date or market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality, but that the losses are temporary in nature. At March 31, 2022, the Company does not intend to sell and is not likely to be required to sell the available for sale securities that were in a loss position prior to full recovery.

The following tables show contractual maturities of the investment portfolio as of March 31, 2022:

	March 31, 2022
	Amortized Cost		Estimated Fair Value		Book Yield
	(dollars in thousands)
Securities available for sale

U.S. Treasury
Due after one but within five years		4,791		4,686		1.77	%
Due after five but within ten years		26,619		24,703		1.24	%
		31,410		29,389		1.32	%
U.S. Government agencies
Due within twelve months		4,001		4,019		1.80	%
Due after one but within five years		2,143		2,050		1.91	%
Due after five but within ten years		17,419		16,980		0.80	%
Due after ten years		18,727		18,626		1.09	%
		42,290		41,675		1.08	%
Mortgage-backed securities
Due after one but within five years		5,441		5,391		3.46	%
Due after five but within ten years		42,723		39,741		1.18	%
Due after ten years		76,585		71,944		1.35	%
		124,749		117,076		1.38	%
Asset-backed securities
Due after ten years		42,161		42,261		1.32	%
		42,161		42,261		1.32	%
State and political subdivisions
Due within twelve months		105		105		4.50	%
Due after one but within five years		1,542		1,528		2.50	%
Due after five but within ten years		6,291		5,903		1.96	%
Due after ten years		85,445		76,538		1.86	%
		93,383		84,074		1.88	%
Corporate bonds
Due within twelve months		2,000		2,002		2.98	%
Due after one but within five years		4,000		3,808		0.83	%
Due after five but within ten years		2,000		1,983		2.00	%
		8,000		7,793		1.66	%
Total securities available for sale
Due within twelve months		6,106		6,126		2.23	%
Due after one but within five years		17,917		17,463		2.15	%
Due after five but within ten years		95,052		89,310		1.19	%
Due after ten years		222,918		209,369		1.52	%
	$	341,993	$	322,268		1.47	%

	March 31, 2022
	Amortized Cost		Estimated Fair Value		Book Yield
	(dollars in thousands)
Securities held to maturity

U. S. Government agencies
Due after one but within five years	$	152	$	149		2.80	%
		152		149		2.80	%
State and political subdivisions
Due within twelve months		1,346		1,351		2.08	%
Due after one but within five years		896		902		2.26	%
Due after ten years		13,328		12,968		2.85	%
		15,570		15,221		2.75	%
Corporate Bonds
Due after five but within ten years		15,000		14,539		4.57	%
		15,000		14,539		4.57	%
Total securities held for maturity
Due within twelve months		1,346		1,351		2.08	%
Due after one but within five years		1,048		1,051		2.34	%
Due after five but within ten years		15,000		14,539		4.57	%
Due after ten years		13,328		12,968		2.85	%
	$	30,722	$	29,909		3.64	%

The portion of unrealized gains and losses for the three months ended March 31, 2022 and 2021 related to equity securities still held at the reporting date is calculated as follows:

	Three Months Ended March 31,
	2022			2021
	(dollars in thousands)
Gross proceeds from sales	$	—		$	929

Net losses recognized during the period on equity securities	$	(9	)	$	(19	)
Less: Net losses recognized from equity securities sold during the period		—			(18	)
Unrealized losses recognized during the period on equity securities still held at the reporting date	$	(9	)	$	(1	)