Securities

12 Months Ended

Dec. 31, 2023

Note 2. Securities

On January 1, 2023, the Company adopted ASC 326, which made changes to the accounting for available-for-sale debt securities whereby credit losses should be presented as an allowance, rather than as a write-down when management does not intend to sell and does not believe that it is more likely than not, they will be required to sell prior to maturity. For further discussion on the Company’s accounting policies and policy elections related to the accounting standard update refer to “Note 1. Description of Business and Summary of Significant Accounting Policies.”

All securities information presented as of December 31, 2023, is in accordance with ACS 326. All securities information presented as of December 31, 2022, or a prior date is in accordance with previous applicable GAAP. See information regarding the Company’s prior accounting policies in “Note 1. Significant Accounting Policies” in the Company’s 2022 Form 10-K. Securities had no associated ACL as of December 31, 2023.

The amortized cost and fair value, with gross unrealized gains and losses, of securities available-for-sale as of the dates indicated were as follows:

	December 31, 2023
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(dollars in thousands)	Cost		Gains		(Losses)			Value
U.S. Treasury securities	$	4,068	$	-	$	(211	)	$	3,857
Obligations of U.S. Government agencies		43,233		167		(665	)		42,735
Obligations of state and political subdivisions		58,292		13		(7,708	)		50,597
Mortgage-backed securities		91,328		84		(10,105	)		81,307
Money market investments		2,047		-		-			2,047
Corporate bonds and other securities		27,500		-		(3,765	)		23,735
	$	226,468	$	264	$	(22,454	)	$	204,278

	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(dollars in thousands)	Cost		Gains		(Losses)			Value
U.S. Treasury securities	$	8,013	$	-	$	(342	)	$	7,671
Obligations of U.S. Government agencies		43,622		10		(1,233	)		42,399
Obligations of state and political subdivisions		70,491		-		(11,107	)		59,384
Mortgage-backed securities		99,874		-		(10,961	)		88,913
Money market investments		1,816		-		-			1,816
Corporate bonds and other securities		27,990		-		(2,655	)		25,335
	$	251,806	$	10	$	(26,298	)	$	225,518

Securities with a fair value of $81.5 million and $82.6 million at December 31, 2023 and 2022, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase, FHLB advances and for other purposes required or permitted by law.

At December 31, 2023, the Company held no securities of any single issuer (excluding U.S. Government agencies) with a book value that exceeded 10 percent of stockholders’ equity.

The amortized cost and fair value of securities by contractual maturity are shown below.

	December 31, 2023
	Amortized		Fair
(dollars in thousands)	Cost		Value
Due in one year or less	$	1,570	$	1,541
Due after one year through five years		12,962		12,178
Due after five through ten years		63,248		54,806
Due after ten years		146,641		133,706
Other securities, restricted		2,047		2,047
	$	226,468	$	204,278

The following table shows realized gains and losses on the sale of investment securities sold during the years ended December 31, 2023 and 2022:

	Years Ended
	December 31,
(dollars in thousands)	2023				2022
Realized gains on sales of securities		$	1,061			$	-
Realized losses on sales of securities			(1,195	)			(1,870	)
Net realized loss		$	(134	)		$	(1,870	)

Securities in an unrealized loss position at December 31, 2023, by duration of the period of unrealized loss, are shown below.

	December 31, 2023
	Less than 12 months				12 months or more				Total
	Gross				Gross				Gross				Number
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		of
(dollars in thousands)	Losses		Value		Losses		Value		Losses		Value		Securities
U.S. Treasury securities	$	-	$	-	$	211	$	3,857	$	211	$	3,857		1
Obligations of U.S. Government agencies		91		8,803		574		22,817		665		31,620		43
Obligations of state and political subdivisions		-		-		7,708		49,597		7,708		49,597		43
Mortgage-backed securities		96		4,423		10,009		73,347		10,105		77,770		40
Corporate bonds and other securities		-		-		3,765		22,735		3,765		22,735		23
Total securities available-for-sale	$	187	$	13,226	$	22,267	$	172,353	$	22,454	$	185,579		150

There were 150 debt securities totaling $185.6 million of aggregate fair value below amortized cost basis at December 31, 2023. The Company concluded that a credit loss did not exist in its securities portfolio at December 31, 2023, and no impairment loss has been recognized based on the fact that (1) changes in fair value were caused primarily by fluctuations in interest rates, (2) securities with unrealized losses had generally high credit quality, (3) the Company intends to hold these investments in debt securities to maturity and it is more-likely-than-not that the Company will not be required to sell these investments before a recovery of its investment, and (4) issuers have continued to make timely payments of principal and interest. Additionally, the Company’s mortgage-backed securities are entirely issued by either U.S. government agencies or U.S. government-sponsored enterprises. Collectively, these entities provide a guarantee, which is either explicitly or implicitly supported by the full faith and credit of the U.S. government, that investors in such mortgage-backed securities will receive timely principal and interest payments.

Securities in an unrealized loss position at December 31,2022, by duration of the period of unrealized loss, are shown below.

	December 31, 2022
	Less than 12 months				12 months or more				Total
	Gross				Gross				Gross				Number
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair		of
(dollars in thousands)	Losses		Value		Losses		Value		Losses		Value		Securities
U.S. Treasury securities	$	342	$	7,671	$	-	$	-	$	342	$	7,671		4
Obligations of U.S. Government agencies		258		13,873		975		22,851		1,233		36,724		43
Obligations of state and political subdivisions		5,386		33,720		5,721		23,856		11,107		57,576		56
Mortgage-backed securities		4,157		52,717		6,804		36,196		10,961		88,913		38
Corporate bonds and other securities		1,084		12,906		1,571		11,429		2,655		24,335		21
Total securities available-for-sale	$	11,227	$	120,887	$	15,071	$	94,332	$	26,298	$	215,219		162

The restricted stock category is comprised of FHLB, FRB, and CBB stock. These stocks are classified as restricted securities because their ownership is restricted to certain types of entities and the securities lack a market. Therefore, FHLB, FRB, and CBB stock are carried at cost and evaluated for impairment. When evaluating these stocks for impairment, their value is determined based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. Restricted stock is viewed as a long-term investment and management believes that the Company has the ability and the intent to hold this stock until its value is recovered. The Company did not consider its investment in restricted stock to be impaired at December 31, 2023 and no impairment has been recognized.