Investment securities

3 Months Ended

Mar. 31, 2023

Investment securities

Investment securities

4. Investment securities:

The amortized cost and fair value of investment securities aggregated by investment category at March 31, 2023 and December 31, 2022 are summarized as follows:

	March 31, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Available-for-sale:
U.S. Treasury securities	$	197,660	$		$	16,096	$	181,564
U.S. government-sponsored enterprises		16,872				441		16,431
State and municipals:
Taxable		68,426		5		11,227		57,204
Tax-exempt		77,668		1		9,095		68,574
Residential mortgage-backed securities:
U.S. government agencies		942				34		908
U.S. government-sponsored enterprises		95,947				17,735		78,212
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises		12,105				484		11,621
Corporate debt securities		4,000				389		3,611
Total	$	473,620	$	6	$	55,501	$	418,125
Held-to-maturity:
Tax-exempt state and municipals	$	11,228	$	8	$	674	$	10,562
Residential mortgage-backed securities:
U.S. government agencies		16,806				2,541		14,265
U.S. government-sponsored enterprises		61,671				9,425		52,246
Total	$	89,705	$	8	$	12,640	$	77,073

	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Available-for-sale:
U.S. Treasury securities	$	199,937	$		$	19,640	$	180,297
U.S. government-sponsored enterprises		16,955				585		16,370
State and municipals:
Taxable		68,946				13,588		55,358
Tax-exempt		99,774		93		11,460		88,407
Residential mortgage-backed securities:
U.S. government agencies		982				40		942
U.S. government-sponsored enterprises		141,231				20,112		121,119
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises		12,128				544		11,584
Corporate debt securities		4,000				374		3,626
Total	$	543,953	$	93	$	66,343	$	477,703
Held-to-maturity:
Tax-exempt state and municipals	$	11,237	$	1	$	841	$	10,397
Residential mortgage-backed securities:
U.S. government agencies		17,304				3,016		14,288
U.S. government-sponsored enterprises		62,638				10,760		51,878
Total	$	91,179	$	1	$	14,617	$	76,563

The Company had net unrealized losses on available-for-sale securities of $43.5 million net of deferred income taxes of $12.0 million at March 31, 2023 and net unrealized losses on available-for-sale securities of $52.0 million net of deferred income taxes of $14.3 million at December 31, 2022. During the three month period ended March 31, 2023, investment securities, including U.S. Treasury bonds and mortgage-backed securities, with a par value of $65.6 million were sold at a net gain of $81 thousand. The proceeds were used to pay-down higher cost short-term borrowings.

The maturity distribution of the fair value, which is the net carrying amount, of the debt securities classified as available-for-sale at March 31, 2023, is summarized as follows:

	Fair
(Dollars in thousands)	Value
Within one year	$	15,202
After one but within five years		176,975
After five but within ten years		66,629
After ten years		66,319
		325,125
Mortgage-backed and other amortizing securities		93,000
Total	$	418,125

 The maturity distribution of the amortized cost and fair value, of debt securities classified as held-to-maturity at March 31, 2023, is summarized as follows:

	Amortized		Fair
(Dollars in thousands)	Cost		Value
Within one year	$		$
After one but within five years
After five but within ten years		8,877		8,355
After ten years		2,351		2,207
		11,228		10,562
Mortgage-backed securities		78,477		66,511
Total	$	89,705	$	77,073

Securities with a carrying value of $151.2 million and $168.0 million at March 31, 2023 and December 31, 2022, respectively, were pledged to secure public deposits and certain other deposits as required or permitted by law.

Securities and short-term investment activities are conducted with a diverse group of government entities, corporations and state and local municipalities. The counterparty’s creditworthiness and type of collateral is evaluated on a case-by-case basis. At March 31, 2023 and December 31, 2022, there were no significant concentrations of credit risk from any one issuer, with the exception of U.S. government agencies and sponsored enterprises, which exceeded 10.0 percent of stockholders’ equity.

The fair value and gross unrealized losses of investment securities with unrealized losses at March 31, 2023 and December 31, 2022, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, are summarized as follows:

	March 31, 2023
	Less Than 12 Months					12 Months or Greater					Total
	Number of					Number of					Number of
	Securities in a	Fair		Unrealized		Securities in a	Fair		Unrealized		Securities in a	Fair		Unrealized
(Dollars in thousands)	Loss Position	Value		Losses		Loss Position	Value		Losses		Loss Position	Value		Losses
U.S. Treasury securities		$		$		43	$	181,564	$	16,096	43	$	181,564	$	16,096
U.S. government-sponsored enterprises						5		16,431		441	5		16,431		441
State and municipals:
Taxable	2		999		19	63		54,709		11,208	65		55,708		11,227
Tax-exempt	7		3,095		29	98		70,366		9,740	105		73,461		9,769
Residential mortgage-backed securities:
U.S. government agencies	2		818		31	7		14,355		2,544	9		15,173		2,575
U.S. government-sponsored enterprises	1		527		12	40		129,931		27,148	41		130,458		27,160
Commercial mortgage-backed securities:
U.S. government agencies
U.S. government-sponsored enterprises	1		1,926		86	3		9,695		398	4		11,621		484
Corporate debt securities						6		3,611		389	6		3,611		389
Total	13	$	7,365	$	177	265	$	480,662	$	67,964	278	$	488,027	$	68,141

	December 31, 2022
	Less Than 12 Months					12 Months or Greater					Total
	Number of					Number of					Number of
	Securities in a	Fair		Unrealized		Securities in a	Fair		Unrealized		Securities in a	Fair		Unrealized
(Dollars in thousands)	Loss Position	Value		Losses		Loss Position	Value		Losses		Loss Position	Value		Losses
U.S. Treasury securities	5	$	23,700	$	1,887	40	$	156,597	$	17,753	45	$	180,297	$	19,640
U.S. government-sponsored enterprises	4		14,104		197	1		2,266		388	5		16,370		585
State and municipals:
Taxable	21		19,919		2,908	45		34,464		10,680	66		54,383		13,588
Tax-exempt	39		30,973		1,690	84		59,664		10,611	123		90,637		12,301
Residential mortgage-backed securities:
U.S. government agencies	5		904		39	4		14,326		3,017	9		15,230		3,056
U.S. government-sponsored enterprises	19		57,166		2,029	25		115,831		28,843	44		172,997		30,872
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises	4		11,584		544						4		11,584		544
Corporate debt securities	1		953		47	5		2,673		327	6		3,626		374
Total	98	$	159,303	$	9,341	204	$	385,821	$	71,619	302	$	545,124	$	80,960

As described in Note 1, on January 1, 2023 the Company adopted amended accounting guidance that requires an allowance for credit losses be deducted from the amortized cost basis of financial assets, including investment securities held to maturity, to present the net carrying value at the amount that is expected to be collected over the contractual term of the asset. The Company estimated no allowance for credit losses for its investment securities classified as held-to-maturity at January 1, 2023 or March 31, 2023, as the portfolio of held-to-maturity securities consists entirely of U.S. government sponsored enterprises, agencies and states and political subdivisions investments.

The unrealized losses on securities are primarily due to the changes in market interest rates subsequent to purchase. In addition, the Company does not intend to sell and does not believe that it is more likely than not that it will be required to sell these investments until there is a full recovery of the unrealized loss, which may be at maturity. As a result, there was no allowance for credit loss required on available-for-sale debt securities in an unrealized loss position at March 31, 2023 and December 31, 2022.