Investment securities

12 Months Ended

Dec. 31, 2023

Investment securities

Investment securities

2. Investment securities:

The amortized cost and fair value of investment securities aggregated by investment category at December 31, 2023 and 2022 are summarized below. There is no ACL of debt securities available for sale or held to maturity at December 31, 2023.

	December 31, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Available for sale:
U.S. Treasury securities	$	197,920	$		$	13,863	$	184,057
U.S. government-sponsored enterprises		2,539				387		2,152
State and municipals:
Taxable		67,831				10,731		57,100
Tax-exempt		75,742				8,618		67,124
Residential mortgage-backed securities:
U.S. government agencies		758				34		724
U.S. government-sponsored enterprises		89,935				17,264		72,671
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises		11,729				360		11,369
Corporate debt securities		4,000				270		3,730
Total	$	450,454	$		$	51,527	$	398,927
Held to maturity:
Tax-exempt state and municipals	$	11,201	$	1	$	660	$	10,542
Residential mortgage-backed securities:
U.S. government agencies		15,400				2,653		12,747
U.S. government-sponsored enterprises		58,250				9,841		48,409
Total	$	84,851	$	1	$	13,154	$	71,698

	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

At December 31, 2023, our marketable equity security portfolio consisted of stock of one financial institution. At December 31, 2023 and December 31, 2022, we had $98 thousand and $110 thousand in equity securities recorded at fair value. At December 31, 2023, the fair value of our equity portfolio was less than the cost basis by $55 thousand. The following is a summary of unrealized and realized gains and losses recognized in net income on equity marketable securities during 2023, 2022 and 2021.

(Dollars in thousands)		2023		2022		2021
Net (loss) gain recognized during the period on equity securities	$	(11)	$	(31)	$	2
Unrealized (loss) gain recognized during the reporting period on equity securities still held at the reporting date	$	(11)	$	(31)	$	2

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

	Amortized		Fair
(Dollars in thousands)	Cost		Value
Within one year	$	22,594	$	21,898
After one but within five years		192,724		178,449
After five but within ten years		53,280		46,627
After ten years		76,895		65,037
		345,493		312,011
Mortgage-backed and other amortizing securities		104,961		86,916
Total	$	450,454	$	398,927

Expected maturities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

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

	Amortized		Fair
(Dollars in thousands)	Cost		Value
After one but within five years	$	569	$	528
After five but within ten years		10,632		10,014
		11,201		10,542
Mortgage-backed securities		73,650		61,156
Total	$	84,851	$	71,698

Securities with a carrying value of $322.4 million and $168.0 million at December 31, 2023 and 2022, respectively, were pledged in part to secure public deposits and certain other deposits as required or permitted by law; and as collateral for borrowing lines. At December 31, 2023, $191.0 million was pledged to the Federal Reserve’s BTFP as a source of contingent liquidity. There was no correspondent amount in the prior year’s period.

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 December 31, 2023 and 2022, there were no significant concentrations of credit risk from any one issuer, with the exception of U.S. government agencies and sponsored enterprises that exceeded 10.0 percent of stockholders’ equity.

The fair value and gross unrealized losses of investment securities with unrealized losses for which a credit loss has not been recognized at December 31, 2023 and 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:

	December 31, 2023
	Less than Twelve Months					Twelve Months or Longer					Total
	Total # in a loss				Unrealized	Total # in a loss				Unrealized	Total # in a loss				Unrealized
(Dollars in thousands)	Position		Fair Value		Losses	Position		Fair Value		Losses	Position		Fair Value		Losses
Securities Held to Maturity
State and municipals:
Tax-exempt	2	$	1,438	$	36	10	$	6,209	$	624	12	$	7,647	$	660
Residential mortgage-backed securities:
U.S. government agencies						4		12,747		2,653	4		12,747		2,653
U.S. government-sponsored enterprises						8		48,409		9,841	8		48,409		9,841
Total	2	$	1,438	$	36	22	$	67,365	$	13,118	24	$	68,803	$	13,154
Securities Available for Sale
U.S. Treasury securities						43	$	184,057	$	13,863	43	$	184,057	$	13,863
U.S. government-sponsored enterprises						2		2,152		387	2		2,152		387
State and municipals:
Taxable	1	$	995	$	6	65		56,105		10,725	66		57,100		10,731
Tax-exempt	2		575		5	93		66,393		8,613	95		66,968		8,618
Residential mortgage-backed securities:
U.S. government agencies						3		724		34	3		724		34
U.S. government-sponsored enterprises						32		72,671		17,264	32		72,671		17,264
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises						4		11,369		360	4		11,369		360
Corporate debt securities						6		3,730		270	6		3,730		270
Total	3	$	1,570	$	11	248	$	397,201	$	51,516	251	$	398,771	$	51,527

	December 31, 2022
	Less than Twelve Months					Twelve Months or Longer					Total
	Total # in a loss				Unrealized	Total # in a loss				Unrealized	Total # in a loss				Unrealized
(Dollars in thousands)	Position		Fair Value		Losses	Position		Fair Value		Losses	Position		Fair Value		Losses
Securities Held to Maturity
State and municipals:
Tax-exempt	3	$	3,150	$	29	10	$	2,906	$	783	13	$	6,056	$	812
Residential mortgage-backed securities:
U.S. government agencies	2		5			3		14,283		3,016	5		14,288		3,016
U.S. government-sponsored enterprises	1		12			8		51,866		10,760	9		51,878		10,760
Total	6	$	3,167	$	29	21	$	69,055	$	14,559	27	$	72,222	$	14,588
Securities Available for Sale
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	36		27,823		1,661	74		56,758		9,828	110		84,581		11,489
Residential mortgage-backed securities:
U.S. government agencies	3		899		39	1		43		1	4		942		40
U.S. government-sponsored enterprises	18		57,154		2,029	17		63,965		18,083	35		121,119		20,112
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises	4		11,584		544						4		11,584		544
Corporate debt securites	1		953		47	5		2,673		327	6		3,626		374
Total	92		156,136		9,312	183		316,766		57,060	275		472,902		66,372

Management considered whether a credit loss existed related to the investments in an unrealized loss position by determining (i) whether the decline in fair value is attributable to adverse conditions specifically related to the financial condition of the security issuer or specific conditions in an industry or geographic area; (ii) whether the credit rating of the issuer of the security has been downgraded; (iii) whether dividend or interest payments have been reduced or have not been made and (iv) an adverse change in the remaining expected cash flows from the security such that the Company will not recover the amortized cost of the security. If the decline is judged to be due to factors related to credit, the credit loss should be recorded as an ACL with an offsetting entry to net income. The portion of the loss related to non-credit factors are recorded in OCI.

Based on management’s assessment of the factors identified above, it is determined the fair value of all the identified investments being less than the amortized costs is primarily caused by the rapid increase in market rates and not credit quality. All interest payments have been received as scheduled and no material downgrades announced. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider the unrealized loss to be credit related, thus no allowance for credit loss expense was recorded at December 31, 2023.

There was no credit loss to investment securities recognized for the year ended December 31, 2023 and no other than temporary impairments recognized for the years ended December 31, 2022 and 2021.