Securities Available for Sale

6 Months Ended

Jun. 30, 2023

Securities Available for Sale [Abstract]

Securities Available for Sale

3. Securities Available for Sale

The amortized cost, gross unrealized gains and losses, approximate fair value, and allowance for credit losses of investment securities held at June 30, 2023, are as follows:  

			Gross		Gross			Allowance
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			for Credit		Fair
	Cost		Gains		Losses			Losses		Value
	$		$		$			$		$
June 30, 2023
U.S. treasuries		19,854		—		(2,089	)		—		17,765
U.S. government agencies		19,400		—		(2,412	)		—		16,988
U.S. agency mortgage-backed securities		46,834		—		(4,328	)		—		42,506
U.S. agency collateralized mortgage obligations		23,090		—		(2,446	)		—		20,644
Non-agency MBS/CMO		54,138		18		(4,004	)		—		50,152
Asset-backed securities		70,355		21		(1,835	)		—		68,541
Corporate bonds		61,401		—		(7,325	)		—		54,076
Obligations of states and political subdivisions		213,140		—		(27,808	)		—		185,332
Total securities available for sale		508,212		39		(52,247	)		—		456,004

The amortized cost, gross unrealized gains and losses, and approximate fair value of investment securities held at December 31, 2022, are as follows:

			Gross		Gross
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	$		$		$			$
December 31, 2022
U.S. Treasuries		35,737		—		(3,080	)		32,657
U.S. government agencies		27,605		—		(2,818	)		24,787
U.S. agency mortgage-backed securities		49,939		—		(4,632	)		45,307
U.S. agency collateralized mortgage obligations		30,193		—		(2,703	)		27,490
Non-agency MBS/CMO		53,900		—		(3,650	)		50,250
Asset-backed securities		76,110		16		(2,892	)		73,234
Corporate bonds		76,685		10		(7,064	)		69,631
Obligations of states and political subdivisions		240,102		10		(34,326	)		205,786
Total securities available for sale		590,271		36		(61,165	)		529,142

The amortized cost and fair value of securities available for sale at June 30, 2023, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities due to certain call or prepayment provisions.

CONTRACTUAL MATURITY OF DEBT SECURITIES
(DOLLARS IN THOUSANDS)
	Amortized
	Cost		Fair Value
	$		$
Due in one year or less		—		—
Due after one year through five years		96,888		87,463
Due after five years through ten years		75,828		64,408
Due after ten years		335,496		304,133
Total debt securities		508,212		456,004

Securities available for sale with a par value of $119,952,000 and $116,179,000 at June 30, 2023, and December 31, 2022, respectively, were pledged or restricted for public funds, borrowings, or other purposes as required by law. The fair value of these pledged securities was $110,159,000 at June 30, 2023, and $107,071,000 at December 31, 2022.

Proceeds from active sales of securities available for sale, along with the associated gross realized gains and gross realized losses, are shown below. Realized gains and losses are computed on the basis of specific identification.

PROCEEDS FROM SALES OF SECURITIES AVAILABLE FOR SALE

(DOLLARS IN THOUSANDS)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	$		$		$		$
Proceeds from sales		32,972		—		61,089		8,576

Information pertaining to securities with gross unrealized losses at June 30, 2023, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

TEMPORARY IMPAIRMENTS OF SECURITIES

(DOLLARS IN THOUSANDS)

	Less than 12 months					More than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	$		$			$		$			$		$
As of June 30, 2023
U.S. Treasuries		—		—			17,765		(2,089	)		17,765		(2,089	)
U.S. government agencies		—		—			16,988		(2,412	)		16,988		(2,412	)
U.S. agency mortgage-backed securities		—		—			42,506		(4,328	)		42,506		(4,328	)
U.S. agency collateralized mortgage obligations		527		(25	)		20,117		(2,421	)		20,644		(2,446	)
Non-Agency MBS/CMO		7,410		(669	)		39,711		(3,335	)		47,121		(4,004	)
Asset-backed securities		2,898		(43	)		64,123		(1,792	)		67,021		(1,835	)
Corporate bonds		1,711		(289	)		52,365		(7,036	)		54,076		(7,325	)
Obligations of states & political subdivisions		532		(5	)		184,770		(27,803	)		185,302		(27,808	)
Total temporarily impaired securities		13,078		(1,031	)		438,345		(51,216	)		451,423		(52,247	)

Information pertaining to securities with gross unrealized losses at December 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

TEMPORARY IMPAIRMENTS OF SECURITIES

(DOLLARS IN THOUSANDS)

	Less than 12 months					More than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	$		$			$		$			$		$
As of December 31, 2022
U.S. Treasuries		19,721		(1,169	)		12,936		(1,911	)		32,657		(3,080	)
U.S. government agencies		1,953		(52	)		21,634		(2,766	)		23,587		(2,818	)
U.S. agency mortgage-backed securities		24,667		(1,653	)		20,640		(2,979	)		45,307		(4,632	)
U.S. agency collateralized mortgage obligations		9,984		(500	)		17,453		(2,203	)		27,437		(2,703	)
Non-Agency MBS/CMO		50,250		(3,650	)		—		—			50,250		(3,650	)
Asset-backed securities		29,283		(1,028	)		42,032		(1,864	)		71,315		(2,892	)
Corporate bonds		15,197		(1,230	)		43,417		(5,834	)		58,614		(7,064	)
Obligations of states & political subdivisions		103,200		(10,949	)		100,575		(23,377	)		203,775		(34,326	)
Total temporarily impaired securities		254,255		(20,231	)		258,687		(40,934	)		512,942		(61,165	)

In the debt security portfolio there were 325 positions carrying unrealized losses as of June 30, 2023.

Management evaluates all of the Corporation’s securities for expected credit losses. No securities in the portfolio required an allowance for credit losses to be recorded in the first half of 2023 or other-than-temporary impairment in 2022.

Unrealized losses on the Corporation’s available-for-sale debt securities have not been recognized into income because the bonds are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is solely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.