Investment Securities

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Note 4 – Investment Securities

The following summarizes the amortized cost and fair value of securities

available-for-sale

at June 30, 2023 and December 31, 2022 with gross unrealized gains and losses therein:


	June 30, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value

Available -for-sale	(In thousands)
Mortgage-backed securities - U.S. government sponsored enterprises (GSEs)	$	42,035	$	6	$	(6,502	)	$	35,539
U.S. government agency securities		6,260		—		(1,079	)		5,181
Obligations of state and political subdivisions		44,311		6		(3,779	)		40,538
Small Business Association (SBA) securities		3,362		1		—			3,363
Subordinated debentures		450		—		—			450
Small business investment company securities		2,684		—		(583	)		2,101

Total	$	99,102	$	13	$	(11,943	)	$	87,172


	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value

Available -for-sale	(In thousands)
Mortgage-backed securities - U.S. government sponsored enterprises (GSEs)	$	41,515	$	2	$	(6,602	)	$	34,915
U.S. government agency securities		6,260		—		(1,175	)		5,085
Obligations of state and political subdivisions		45,161		8		(3,828	)		41,341
Small business investment company securities		2,061		—		—			2,061

Total	$	94,997	$	10	$	(11,605	)	$	83,402

The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related securities

available-for-sale

at June 30, 2023 and December 31, 2022 are as follows:


	Less than 12 Months					More than 12 Months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses

June 30, 2023	(In thousands)
Mortgage-backed securities - U.S. government sponsored enterprises (GSEs)	$	1,713	$	(77	)	$	31,480	$	(6,425	)	$	33,193	$	(6,502	)
U.S. government agency securities		—	$	—			5,181		(1,079	)		5,181		(1,079	)
Obligations of state and political subdivisions		12,409		(367	)		23,814		(3,412	)		36,223		(3,779	)
Small business investment company securities		2,101		(583	)		—		—			2,101		(583	)

Total	$	16,223	$	(1,027	)	$	60,475	$	(10,916	)	$	76,698	$	(11,943	)


	Less than 12 Months					More than 12 Months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses

December 31, 2022	(In thousands)
Mortgage-backed securities - U.S. government sponsored enterprises (GSEs)	$	15,605	$	(1,778	)	$	19,137	$	(4,824	)	$	34,742	$	(6,602	)
U.S. government agency securities		—		—			5,085		(1,175	)		5,085		(1,175	)
Obligations of state and political subdivisions		36,421		(3,457	)		1,352		(371	)		37,773		(3,828	)

	$	52,026	$	(5,235	)	$	25,574	$	(6,370	)	$	77,600	$	(11,605	)

The amortized cost and fair value of securities

available-for-sale

at June 30, 2023 by contractual maturity are shown below. Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties:


	Amortized
	Cost		Fair Value

	(In thousands)
Due in one year or less	$	150	$	150
Due after one year through five years		4,987		4,876
Due after five years through ten years		26,903		24,914
Due after ten years		18,531		15,779
Mortgage-backed securities (GSEs)		42,035		35,539
Small Business Association (SBA) securities		3,362		3,363
Subordinated debentures		450		450
SBIC securities		2,684		2,101

	$	99,102	$	87,172

Proceeds from calls and maturities of

available-for-sale

securities amounted to $525 thousand for the three-month period ended June 30, 2023, for which there was no gain recorded. Proceeds from calls and maturities of

available-for-sale

securities amounted to $830 thousand for the

six-month

period ended June 30, 2023

for

which there was no gain recorded. There were no sales of securities

available-for-sale

or proceeds from calls for the

six-month

period ended June 30, 2022.

On January 1, 2023, the Company adopted ASU

2016-13

and implemented the CECL methodology for allowance for credit losses on its investment securities

available-for-sale.

The new CECL methodology replaces the other-than-temporary impairment model that previously existed. The company did not have a CECL day 1 impact attributable to its investment securities portfolio and did not have an allowance for credit losses on its investment securities available for sale as of June 30, 2023.

The Company’s securities primarily consist of the following types of instruments; U.S. guaranteed mortgage-backed securities, U.S guaranteed agency bonds, state and political subdivision issued bonds, one small business investment company security guaranteed by the U.S. government and a subordinate debenture acquired from Noah Bank. We believe it is reasonable to expect that the securities with a credit guarantee of the U.S. government, will have a

zero-credit

loss. Therefore, no reserve was recorded for U.S. guaranteed securities or bonds at June 30, 2023. The state and political subdivision securities carry a minimum investment rating of A. Some of the smaller municipalities also have insurance to cover the Company in the event of default. Therefore, the Company expects to have a

zero-credit

loss and no reserve was recorded as of June 30, 2023.

At June 30, 2023, the Company’s

available-for-sale

securities portfolio consisted of approximately 219 securities, of which 129

available-for-sale

securities were in an unrealized loss position for more than twelve months and 65

available-for-sale

securities were in a loss position for less than twelve months. The

available-for-sale

securities in a loss position for more than twelve months consisted of 81 municipal securities aggregating $23.8 million with a loss of $3.4 million, 44 mortgage-backed

securities-GSE

aggregating $31.5 million with a loss of $6.4 million and four agency securities aggregating $5.2 million with a loss of $1.1 million. The Company does not intend to sell these securities, and it is not more likely than not that we will be required to sell these securities before recovery of their amortized cost basis. Unrealized losses primarily relate to interest rate fluctuations and not credit concerns. No OTTI charges were recorded for the three and six months ended June 30, 2023 and 2022.

There are no securities pledged as of June 30, 2023 and December 31, 2022.