Securities

12 Months Ended

Dec. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Note 3 – Securities

The amortized cost and fair values of securities available for sale as of December 31, 2023 and December 31, 2022 are as follows:


December 31, 2023	Amortized		Gross Unrealized		Gross Unrealized			Fair
(Dollars in thousands)	Cost		Gains		(Losses)			Value
U.S. Treasury securities	$	122,288	$	35	$	(615	)	$	121,708
U.S. Government agencies		45,131		-		(5,550	)		39,581
MBS/CMO		179,920		171		(24,947	)		155,144
Corporate bonds		19,680		1		(552	)		19,129
Municipal bonds		104,265		31		(19,263	)		85,033
Total Securities Available for Sale	$	471,284	$	238	$	(50,927	)	$	420,595


December 31, 2022	Amortized		Gross Unrealized		Gross Unrealized			Fair
(Dollars in thousands)	Cost		Gains		(Losses)			Value
U.S. Treasury securities	$	245,583	$	-	$	(3,113	)	$	242,470
U.S. Government agencies		35,283		-		(6,528	)		28,755
MBS/CMO		194,964		-		(27,888	)		167,076
Corporate bonds		19,581		-		(852	)		18,729
Municipal bonds		104,831		-		(23,675	)		81,156
Total Securities Available for Sale	$	600,242	$	—	$	(62,056	)	$	538,186

All mortgage-backed securities included in the above tables were issued by U.S. government agencies and corporations. At December 31, 2023, the securities issued by political subdivisions or agencies were highly rated with 100% of the municipal bonds having A+ or higher ratings. Approximately 63% of the municipal bonds are general obligation bonds with issuers that are geographically diverse.

Marketable equity securities consist of nominal investments made by the Company in equity positions of various community banks and bank holding companies and are reported in other assets at fair value on the Consolidated Balance Sheets. Unrealized gains and losses are recorded in the Consolidated Statements of Income.

There were no unrestricted securities classified as held to maturity as of December 31, 2023 or December 31, 2022.

Restricted securities are securities with limited marketability and consist of stock in the FRB, FHLB, CBBFC and an investment in an SBA loan fund. These restricted securities, totaling $8.4 million and $5.1 million as of December 31, 2023 and December 31, 2022, respectively, are carried at cost.

During the year ended December 31, 2023, the Company sold AFS securities with a total book value of $49.8 million, incurring a pre-tax loss of $206 thousand, as part of a strategic decision to reinvest proceeds into higher yielding assets. During the year ended December 31, 2022, there were no sales of securities.

Securities pledged to secure deposits and for other purposes and to facilitate borrowing from the FRB, had carrying values of $21.8 million at December 31, 2023 and $5.1 million at December 31, 2022.

Year-end securities with unrealized losses, segregated by length of time in a continuous unrealized loss position, were as follows:


December 31, 2023
(Dollars in thousands)	Less than 12 Months					12 Months or more					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury Securities	$	-	$	-		$	52,298	$	(615	)	$	52,298	$	(615	)
U.S. Government agencies		10,090		(20	)		29,490		(5,530	)		39,580		(5,550	)
MBS/CMO		-		-			150,045		(24,947	)		150,045		(24,947	)
Corporate bonds		-		-			19,129		(552	)		19,129		(552	)
Municipal bonds		-		-			82,140		(19,263	)		82,140		(19,263	)
	$	10,090	$	(20	)	$	333,102	$	(50,907	)	$	343,192	$	(50,927	)


December 31, 2022
(Dollars in thousands)	Less than 12 Months					12 Months or more					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury Securities	$	242,470	$	(3,113	)	$	-	$	-		$	242,470	$	(3,113	)
U.S. Government agencies		4,285		(620	)		24,218		(5,908	)		28,503		(6,528	)
MBS/CMO		55,396		(6,010	)		111,689		(21,878	)		167,085		(27,888	)
Corporate bonds		18,729		(852	)		-		-			18,729		(852	)
Municipal bonds		44,117		(8,001	)		35,964		(15,674	)		80,081		(23,675	)
	$	364,997	$	(18,596	)	$	171,871	$	(43,460	)	$	536,868	$	(62,056	)

As of December 31, 2023, there were $343.2 million, or 281 issues, of individual securities in a loss position. These securities had an unrealized loss of $50.9 million and consisted of 6 Treasury securities, 21 Agency securities, 119 mortgage-backed/CMOs, 124 municipal bonds, and 11 corporate securities.

The Company’s securities portfolio is primarily made up of fixed rate bonds, whose prices move inversely with interest rates. Any unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. At the end of any accounting period, the portfolio may have both unrealized gains and losses. Management evaluates all investments in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings.

If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, performance on any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specifically related to the security. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any excess is recorded as an ACL, limited by the amount that the fair value is less than the amortized cost basis. Any amount of unrealized loss that has not been recorded through an ACL is recognized in other comprehensive income.

Changes in the ACL are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the ACL when management believes an AFS security is confirmed to be uncollectible or when either of the criteria regarding intent or requirement to sell is met. At December 31, 2023, there was no ACL related to the AFS securities portfolio.

The amortized cost and fair value of AFS debt securities at December 31, 2023 are presented below based upon contractual maturities, by major investment categories. Expected maturities may differ from contractual maturities because issuers have the right to call or prepay obligations.


(Dollars in thousands)	Amortized Cost			Fair Value
U.S. Treasury securities
One year or less	$	120,789		$	120,245
After one year to five years		1,499			1,463
	$	122,288		$	121,708
U.S. Government agencies
One year or less	$	10,000		$	9,981
After one to five years		5,752			5,135
After five years to ten years		25,379			21,416
Ten years or more		4,000			3,049
	$	45,131		$	39,581
MBS/CMO
One year or less	$	3,612		$	3,532
After one year to five years		3,199			3,027
After five years to ten years		3,061			2,796
Ten years or more		170,048			145,789
	$	179,920		$	155,144
Corporate bonds
One year or less	$	1,996	`	$	1,964
After one year to five years		17,684			17,165
	$	19,680		$	19,129
Municipal bonds
After one year to five years	$	3,375		$	3,277
After five years to ten years		21,345			19,859
Ten years or more		79,545			61,897
	$	104,265		$	85,033

Total Debt Securities Available for Sale	$	471,284		$	420,595