NOTE 3 - SECURITIES

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

NOTE 3 - SECURITIES

NOTE 3 - SECURITIES

The composition of securities is as follows:

(in thousands)		Amortized cost basis		Gross un-realized gains		Gross un-realized losses		Fair value
June 30, 2023
Available-for-sale
U.S. Treasury	$	19,315	$	—	$	2,070	$	17,245
U.S. Government Agency notes		27,999		5		2,488		25,516
Municipal bonds		51,037		—		7,375		43,662
Mortgage-backed securities:
U.S. Government agencies and U.S. Government - sponsored enterprises		65,811		18		7,760		58,069
Collateralized mortgage obligations:
U.S. Government agencies		24,414		—		3,589		20,825
Corporate bonds		14,250		—		2,090		12,160
Total securities available-for-sale	$	202,826	$	23	$	25,372	$	177,477
Mutual fund							$	2,020
Non-marketable securities
Federal Home Loan Bank of Boston stock	$	1,488	$	—	$	—	$	1,488

(in thousands)		Amortized cost basis		Gross un-realized gains		Gross un-realized losses		Fair value
December 31, 2022
Available-for-sale
U.S. Treasury	$	19,283	$	—	$	2,150	$	17,133
U.S. Government Agency notes		29,696		94		2,636		27,154
Municipal bonds		55,179		—		8,641		46,538
Mortgage-backed securities:
U.S. Government agencies and U.S. Government- sponsored enterprises		69,866		20		8,011		61,875
Collateralized mortgage obligations:
U.S. Government agencies		25,370		—		3,434		21,936
Corporate bonds		14,250		—		1,476		12,774
Total securities available-for-sale	$	213,644	$	114	$	26,348	$	187,410
Mutual fund							$	1,933
Non-marketable securities
Federal Home Loan Bank of Boston stock	$	1,285	$	—	$	—	$	1,285

Salisbury sold $4.0 million of available-for-sale securities during the three and six-month period ended June 30, 2023 realizing gains of $3 thousand and losses of $18 thousand resulting in a net loss of $15 thousand and related tax benefit of $3 thousand. Salisbury sold $22.0 million of available-for-sale securities during the six-month period ended June 30, 2022 realizing gains of $458 thousand and losses of $293 thousand resulting in a net gain of $165 thousand and related tax expense of $35 thousand. Salisbury sold $4.0 million of available-for-sale securities during the three-month period ended June 30, 2022 realizing gains of $3 thousand and losses of $48 thousand resulting in a net loss of $45 thousand and related tax benefit of $9 thousand.

The following tables summarize the aggregate fair value and gross unrealized losses of securities that have been in a continuous unrealized loss position as of the date presented:

	Less than 12 Months				12 Months or Longer				Total
June 30, 2023 (in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Available-for-sale
U.S. Treasury	$	—	$	—	$	17,245	$	2,070	$	17,245	$	2,070
U.S. Government Agency notes		2,670		46		19,469		2,442		22,139		2,488
Municipal bonds		992		22		42,670		7,353		43,662		7,375
Mortgage- backed securities:
U.S. Government agencies and U.S. Government - sponsored enterprises		2,636		25		51,185		7,735		53,821		7,760
Collateralized mortgage obligations:
U.S. Government agencies		—		—		20,825		3,589		20,825		3,589
Corporate bonds		6,890		1,110		5,270		980		12,160		2,090
Total temporarily impaired securities	$	13,188	$	1,203	$	156,664	$	24,169	$	169,852	$	25,372

	Less than 12 Months				12 Months or Longer				Total
December 31, 2022 (in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Available-for-sale
U.S. Treasury	$	6,435	$	484	$	10,698	$	1,666	$	17,133	$	2,150
U.S. Government Agency notes		3,106		158		17,467		2,478		20,573		2,636
Municipal bonds		37,277		5,950		9,261		2,691		46,538		8,641
Mortgage-backed securities:
U.S. Government agencies and U.S. Government-sponsored enterprises		18,861		1,559		39,909		6,452		58,770		8,011
Collateralized mortgage obligations		14,333		1,782		7,603		1,652		21,936		3,434
Corporate bonds		11,251		1,249		1,523		227		12,774		1,476
Total temporarily impaired securities	$	91,263	$	11,182	$	86,461	$	15,166	$	177,724	$	26,348

The table below presents the amortized cost, fair value and tax equivalent yield of securities, by maturity. Debt securities issued by U.S. Government agencies (SBA securities), MBS, and CMOS are disclosed separately in the table below as these securities may prepay prior to the scheduled contractual maturity dates.

June 30, 2023 (in thousands)	Maturity	Amortized cost			Fair value	Yield(1)
U.S. Treasury	Within 1 year	$	1,976	$	1,904	1.53	%
	After 1 year but within 5 years		8,854		8,003	1.24
	After 5 year but within 10 years		8,485		7,338	1.17
	Total		19,315		17,245	1.24
U.S. Government Agency notes	After 1 year but within 5 years		8,951		7,864	1.25
	After 5 year but within 10 years		6,978		5,966	1.43
	Total		15,929		13,830	1.33
Municipal bonds	After 1 year but within 5 years		1,486		1,343	2.11
	After 5 year but within 10 years		15,331		12,827	2.25
	After 10 years but within 15 years		14,589		12,491	2.39
	After 15 years		19,631		17,010	2.42
	Total		51,037		43,662	2.35
Mortgage-backed securities and Collateralized mortgage obligations	Securities not due at a single maturity date		102,295		90,580	3.05
	Total		102,295		90,580	3.05
Corporate bonds	After 5 years but within 10 years		14,250		12,160	4.46
	Total		14,250		12,160	4.46
Securities available-for-sale		$	202,826	$	177,477	2.82	%

⁽¹⁾ Yield is based on amortized cost.

During second quarter 2023, Salisbury realized a pre-tax loss of approximated $15 thousand on the sale of $4.0 million of securities. The sale was executed for strategic purposes and was not driven by credit concerns of the underlying issuers or the need by Salisbury to generate liquidity. For the six months ended June 30, 2023 and 2022, the unrealized losses on the Company’s available-for-sale debt securities were due to changes in interest rates and other market conditions and were not reflective of credit events. The issuers continue to make timely principal and interest payments on the bonds. Agency-backed and government sponsored securities have a long 40 year history with no credit losses, including during times of severe stress such as the 2007-2008 financial crisis. The principal and interest payments on agency guaranteed debt is backed by the U.S. government. Government-sponsored enterprises similarly guarantee principal and interest payments and carry an implicit guarantee from the U.S. Department of the Treasury. Additionally, government-sponsored enterprise securities are exceptionally liquid, readily marketable, and provide a substantial amount of price transparency and price parity, indicating a perception of zero credit losses.

At June 30, 2023 and December 31, 2022, total accrued interest receivable on available-for-sale debt securities, which has been excluded from the reported amortized cost basis on available-for-sale debt securities, was $0.55 million and $0.56 million, respectively, and was reported within accrued interest receivable on the consolidated balance sheets. An allowance was not carried on the accrued interest receivable at either date.