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MARKETABLE SECURITIES
 6 Months Ended
Jun. 30, 2023
Investments, Debt and Equity Securities [Abstract]  
MARKETABLE SECURITIES

NOTE 2 - MARKETABLE SECURITIES

The following tables summarize the amortized cost and fair value of available for sale and held to maturity securities as of June 30, 2023 and December 31, 2022 and the corresponding amounts of gross unrealized gains and losses:

June 30, 2023

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

29,923

 

 

$

—

 

 

$

3,133

 

 

$

26,790

 

Municipal securities

 

 

2,323

 

 

 

119

 

 

 

—

 

 

 

2,442

 

Mortgage-backed securities

 

 

137,875

 

 

 

—

 

 

 

16,435

 

 

 

121,440

 

Collateralized mortgage obligations

 

 

17,838

 

 

 

1

 

 

 

1,915

 

 

 

15,924

 

Total available for sale

 

$

187,959

 

 

$

120

 

 

$

21,483

 

 

$

166,596

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

9,216

 

 

$

—

 

 

$

1,235

 

 

$

7,981

 

Treasury securities

 

 

89,131

 

 

 

—

 

 

 

2,128

 

 

 

87,003

 

Municipal securities

 

 

174,273

 

 

 

451

 

 

 

8,149

 

 

 

166,575

 

Mortgage-backed securities

 

 

125,005

 

 

 

—

 

 

 

15,734

 

 

 

109,271

 

Collateralized mortgage obligations

 

 

39,667

 

 

 

—

 

 

 

7,762

 

 

 

31,905

 

Total held to maturity

 

$

437,292

 

 

$

451

 

 

$

35,008

 

 

$

402,735

 

 

December 31, 2022

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

29,964

 

 

$

—

 

 

$

2,177

 

 

$

27,787

 

Municipal securities

 

 

10,324

 

 

 

326

 

 

 

8

 

 

 

10,642

 

Mortgage-backed securities

 

 

145,896

 

 

 

1

 

 

 

15,556

 

 

 

130,341

 

Collateralized mortgage obligations

 

 

21,981

 

 

 

3

 

 

 

1,827

 

 

 

20,157

 

Total available for sale

 

$

208,165

 

 

$

330

 

 

$

19,568

 

 

$

188,927

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

9,141

 

 

$

—

 

 

$

1,259

 

 

$

7,882

 

Treasury securities

 

 

133,735

 

 

 

—

 

 

 

2,921

 

 

 

130,814

 

Municipal securities

 

 

191,680

 

 

 

658

 

 

 

8,285

 

 

 

184,053

 

Mortgage-backed securities

 

 

132,693

 

 

 

—

 

 

 

14,708

 

 

 

117,985

 

Collateralized mortgage obligations

 

 

41,759

 

 

 

—

 

 

 

7,425

 

 

 

34,334

 

Total held to maturity

 

$

509,008

 

 

$

658

 

 

$

34,598

 

 

$

475,068

 

From time to time, we have reclassified certain securities from available for sale to held to maturity. Such transfers are made at fair value at the date of transfer. The unrealized holding gains and losses at the date of transfer are retained in other comprehensive loss and in the carrying value of the held to maturity securities and are amortized or accreted over the remaining life of the security. During the second quarter of 2022, we transferred $106,157 of securities from available for sale to held to maturity, which included a net unrealized loss on the date of transfer of $13,186. During the third quarter of 2021, we transferred $172,292 of securities from available for sale to held to maturity, which included a net unrealized gain on the date of transfer of $10,235. These unamortized unrealized losses and unaccreted unrealized gains on our transferred securities are included in accumulated other comprehensive loss on our balance sheet and they netted to an unrealized loss of $6,427 at June 30, 2023 compared to an unrealized loss of $5,861 at December 31, 2022. This amount will continue to be amortized and accreted out of accumulated other comprehensive loss over the remaining life of the underlying securities as an adjustment of the yield on those securities.

There is no allowance for credit losses recorded for our available for sale or held to maturity debt securities as of June 30, 2023 or December 31, 2022.

Information pertaining to securities with gross unrealized losses as of June 30, 2023 and December 31, 2022, for which no allowance for credit losses has been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position is detailed in the following tables:

 

Less Than 12 Months

 

 

12 Months or Longer

 

 

Total

 

June 30, 2023

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

—

 

 

$

—

 

 

$

(3,133

)

 

$

26,790

 

 

$

(3,133

)

 

$

26,790

 

Mortgage-backed securities

 

 

(734

)

 

 

18,117

 

 

 

(15,701

)

 

 

103,323

 

 

 

(16,435

)

 

 

121,440

 

Collateralized mortgage obligations

 

 

—

 

 

 

—

 

 

 

(1,915

)

 

 

15,778

 

 

 

(1,915

)

 

 

15,778

 

Total available for sale

 

$

(734

)

 

$

18,117

 

 

$

(20,749

)

 

$

145,891

 

 

$

(21,483

)

 

$

164,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

—

 

 

$

—

 

 

$

(1,235

)

 

$

7,981

 

 

$

(1,235

)

 

$

7,981

 

Treasury securities

 

 

(2,128

)

 

 

87,003

 

 

 

—

 

 

 

—

 

 

 

(2,128

)

 

 

87,003

 

Municipal securities

 

 

(722

)

 

 

71,567

 

 

 

(7,427

)

 

 

70,520

 

 

 

(8,149

)

 

 

142,087

 

Mortgage-backed securities

 

 

(915

)

 

 

9,757

 

 

 

(14,819

)

 

 

99,514

 

 

 

(15,734

)

 

 

109,271

 

Collateralized mortgage obligations

 

 

—

 

 

 

(3,911

)

 

 

(7,762

)

 

 

35,816

 

 

 

(7,762

)

 

 

31,905

 

Total held to maturity

 

$

(3,765

)

 

$

164,416

 

 

$

(31,243

)

 

$

213,831

 

 

$

(35,008

)

 

$

378,247

 

 

 

 

Less Than 12 Months

 

 

12 Months or Longer

 

 

Total

 

December 31, 2022

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

 

Gross
Unrealized
Losses

 

 

Estimated
Fair
Value

 

Available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

$

(1,518

)

 

$

20,323

 

 

$

(659

)

 

$

7,464

 

 

 

(2,177

)

 

 

27,787

 

Municipal securities

 

 

(8

)

 

 

1,659

 

 

 

—

 

 

 

—

 

 

 

(8

)

 

 

1,659

 

Mortgage-backed securities

 

 

(6,150

)

 

 

74,146

 

 

 

(9,406

)

 

 

55,826

 

 

 

(15,556

)

 

 

129,972

 

Collateralized mortgage obligations

 

 

(908

)

 

 

16,575

 

 

 

(919

)

 

 

3,411

 

 

 

(1,827

)

 

 

19,986

 

Total available for sale

 

$

(8,584

)

 

$

112,703

 

 

$

(10,984

)

 

$

66,701

 

 

$

(19,568

)

 

$

179,404

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

(1,259

)

 

$

7,882

 

 

$

—

 

 

$

—

 

 

$

(1,259

)

 

$

7,882

 

Treasury securities

 

 

(2,921

)

 

 

130,814

 

 

 

—

 

 

 

—

 

 

 

(2,921

)

 

 

130,814

 

Municipal securities

 

 

(7,071

)

 

 

118,117

 

 

 

(1,214

)

 

 

3,701

 

 

 

(8,285

)

 

 

121,818

 

Mortgage-backed securities

 

 

(8,355

)

 

 

80,556

 

 

 

(6,353

)

 

 

37,429

 

 

 

(14,708

)

 

 

117,985

 

Collateralized mortgage obligations

 

 

(1,031

)

 

 

10,750

 

 

 

(6,394

)

 

 

23,584

 

 

 

(7,425

)

 

 

34,334

 

Total held to maturity

 

$

(20,637

)

 

$

348,119

 

 

$

(13,961

)

 

$

64,714

 

 

$

(34,598

)

 

$

412,833

 

There were 287 investments in an unrealized loss position at June 30, 2023, of which 74 were available for sale debt securities in an unrealized loss position with no recorded allowance for credit losses. The available for sale securities in a loss position were composed of corporate bonds, collateralized mortgage obligations and mortgage-backed securities. Management evaluates available for sale debt securities in an unrealized loss position to determine whether the impairment is due to credit-related factors or noncredit-related factors. With respect to the collateralized mortgage obligations and mortgage-backed securities issued by the U.S. government and its agencies, the Company has determined that a decline in fair value is not due to credit-related factors. The Company monitors the credit quality of other debt securities through the use of credit ratings and other factors specific to an individual security in assessing whether or not the decline in fair value of municipal or corporate securities, relative to their amortized cost, is due to credit-related factors. Triggers to prompt further investigation of securities when the fair value is less than the amortized cost are when a security has been downgraded and falls below an A credit rating, and the security’s unrealized loss exceeds 20% of its book value. Consideration is given to (1) the extent to which fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value. Based on evaluation of available evidence, management believes the unrealized losses on the securities as of June 30, 2023 and December 31, 2022 are not credit-related. Management does not have the intent to sell any of these securities and believes that it is more likely than not the Company will not have to sell any such securities before recovery of cost. The fair values are expected to recover as the securities approach their maturity date or repricing

date or if market yields for the investments decline. Accordingly, no allowance for credit losses has been recorded for these securities.

Management assesses held to maturity securities sharing similar risk characteristics on a collective basis for expected credit losses under the current expected credit losses ("CECL") methodology. As of June 30, 2023 and December 31, 2022, our held to maturity securities consisted of U.S. government agencies, municipal bonds, treasury securities, collateralized mortgage obligations and mortgage-backed securities issued by the U.S. government and its agencies. With regard to the treasuries, collateralized mortgage obligations and mortgage-backed securities issued by the U.S. government, or agencies thereof, it is expected that the securities will not be settled at prices less than the amortized cost bases of the securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government. For municipal securities, management reviewed key risk indicators, including ratings by credit agencies when available, and determined that there is no current expectation of credit loss. Accordingly, no allowance for credit losses has been recorded for these securities.

As of June 30, 2023, there were no holdings of securities of any one issuer, other than the collateralized mortgage obligations, treasuries and mortgage-backed securities issued by the U.S. government and its agencies, in an amount greater than 10% of total equity attributable to Guaranty Bancshares, Inc.

Securities with fair values of approximately $315,075 and $396,584 at June 30, 2023 and December 31, 2022, respectively, were pledged to secure public fund deposits and for other purposes as required or permitted by law.

The proceeds from sales of available for sale securities and the associated gains and losses are listed below for the:

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Proceeds from sales

 

$

14,029

 

 

$

—

 

 

$

21,268

 

 

$

—

 

Gross gains

 

 

65

 

 

 

—

 

 

 

184

 

 

 

—

 

Gross losses

 

 

(387

)

 

 

—

 

 

 

(413

)

 

 

—

 

The contractual maturities at June 30, 2023 of available for sale and held to maturity securities at carrying value and estimated fair value are shown below. The Company invests in mortgage-backed securities and collateralized mortgage obligations that have expected maturities that differ from their contractual maturities. These differences arise because borrowers and/or issuers may have the right to call or prepay their obligation with or without call or prepayment penalties.

 

 

Available for Sale

 

 

Held to Maturity

 

June 30, 2023

 

Amortized
Cost

 

 

Estimated
Fair
Value

 

 

Amortized
Cost

 

 

Estimated
Fair
Value

 

Due within one year

 

$

—

 

 

$

—

 

 

$

66,242

 

 

$

65,078

 

Due after one year through five years

 

 

9,556

 

 

 

9,104

 

 

 

67,339

 

 

 

64,222

 

Due after five years through ten years

 

 

20,367

 

 

 

17,686

 

 

 

80,604

 

 

 

77,506

 

Due after ten years

 

 

2,323

 

 

 

2,442

 

 

 

58,435

 

 

 

54,753

 

Mortgage-backed securities

 

 

137,875

 

 

 

121,440

 

 

 

125,005

 

 

 

109,271

 

Collateralized mortgage obligations

 

 

17,838

 

 

 

15,924

 

 

 

39,667

 

 

 

31,905

 

Total securities

 

$

187,959

 

 

$

166,596

 

 

$

437,292

 

 

$

402,735