The amortized cost and fair values of investment debt securities available-for-sale at December 31, 2022 and 2021 were as follows:

			Gross		Gross
			unrealized		unrealized
	Fair		holding		holding			Amortized
December 31, 2022	value		gains		losses			cost
U.S. Treasuries	$	301	$	2	$	—		$	299
U.S. Government agency		86,709		—		(15,233	)		101,942
State and municipal		95,367		—		(23,494	)		118,861
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		256,161		—		(45,303	)		301,464
Collateralized mortgage obligations (CMOs)		101,672		—		(18,338	)		120,010
Corporate debt		6,315		—		(326	)		6,641
Total investment securities available-for-sale	$	546,525	$	2	$	(102,694	)	$	649,217

			Gross		Gross
			unrealized		unrealized
	Fair		holding		holding			Amortized
December 31, 2021	value		gains		losses			cost
U.S. Government agency	$	97,499	$	2	$	(2,435	)	$	99,932
State and municipal		131,035		1,716		(1,053	)		130,372
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		329,938		1,273		(3,158	)		331,823
Collateralized mortgage obligations (CMOs)		127,012		398		(1,648	)		128,262
Corporate debt		6,876		179		(8	)		6,705
Total investment securities available-for-sale	$	692,360	$	3,568	$	(8,302	)	$	697,094

The amortized cost and fair value of debt securities available-for-sale by contractual maturity at December 31, 2022 are shown in the following table. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities are assigned to categories based on contractual maturity except for mortgage-backed securities and CMOs which are based on the estimated average life of these securities and state and municipal securities which are based on pre-refunded date, if applicable.

			Amortized
December 31, 2022	Fair value		cost
Due in one year or less	$	488	$	490
Due after one year through five years		94,950		105,174
Due after five years through ten years		372,667		443,013
Due after ten years		78,420		100,540
Total investment securities available-for-sale	$	546,525	$	649,217

Proceeds from sales of investment debt securities available-for-sale were $7,551,000, $282,000 and $6,930,000 for the years ended December 31, 2022, 2021 and 2020, respectively.

The following table presents information related to QNB’s gains and losses on the sales of debt securities, and losses recognized for OTTI of these investments.

December 31,	2022			2021		2020
Gross realized gains	$	8		$	18	$	28
Gross realized losses		(147	)		—		(4	)
Other-than-temporary impairment		—			—		—
Total net gains (losses) on available-for-sale securities	$	(139	)	$	18	$	24

The tax benefit applicable to the net realized losses on debt securities was $29,000 for the year ended December 31, 2022. The tax expense applicable to the net realized gains on debt securities was $4,000 for the year ended December 31, 2021. The tax expense applicable to the net realized gains on debt securities was $5,000 for the year ended December 31, 2020.

There were no OTTI impairment charges recognized for debt securities still held by QNB for the years ended December 31, 2022, 2021 or 2020.

QNB recognizes OTTI for debt securities classified as available-for-sale in accordance with FASB ASC 320, Investments – Debt and Equity Securities, which requires that we assess whether we intend to sell, or it is more likely than not that the Company will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired and that we do not intend to sell and will not be required to sell prior to recovery of our amortized cost basis, the amount of the impairment is separated into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows discounted at the security’s effective yield. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and, therefore, is not required to be recognized as a loss in the Consolidated Statement of Income but is recognized in other comprehensive income (loss). QNB believes that we will fully collect the carrying value of securities on which we have recorded a non-credit related impairment in other comprehensive income (loss).

The following table presents a rollforward of the credit loss component recognized in earnings. The credit loss component of the amortized cost represents the difference between the present value of expected future cash flows and the amortized cost basis of the security prior to considering credit losses. The beginning balance represents the credit loss component for debt securities for which OTTI occurred prior to the beginning of the year. Credit-impaired debt securities must be presented in two components based upon whether the current period is the first time the debt security was credit-impaired (initial credit impairment) or is not the first time the debt security was credit-impaired (subsequent credit impairments). No credit impairments were recognized in 2022, 2021 or 2020. The following table presents a summary of the cumulative credit-related other-than-temporary impairment charges recognized as components of earnings for debt securities still held by QNB:

Year ended December 31,	2022		2021		2020
Balance, beginning of year	$	1	$	1	$	1
Reductions: sale, collateralized debt obligation		—		—		—
Additions:
Initial credit impairments		—		—		—
Subsequent credit impairments		—		—		—
Balance, end of year	$	1	$	1	$	1

At December 31, 2022 and 2021, investments in debt securities available-for-sale totaling $237,645,000 and $264,154,000, respectively, were pledged as collateral for repurchase agreements and deposits of public funds.

Debt securities that have been in a continuous unrealized loss position are as follows:

December 31, 2022
			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
U.S. Government agency		46	$	3,647	$	(353	)	$	83,062	$	(14,880	)	$	86,709	$	(15,233	)
State and municipal		216		50,156		(7,816	)		45,210		(15,678	)		95,366		(23,494	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		197		58,811		(6,775	)		197,351		(38,528	)		256,162		(45,303	)
Collateralized mortgage obligations (CMOs)		129		35,797		(3,983	)		65,875		(14,355	)		101,672		(18,338	)
Corporate debt		4		6,262		(318	)		53		(8	)		6,315		(326	)
Total		592	$	154,673	$	(19,245	)	$	391,551	$	(83,449	)	$	546,224	$	(102,694	)

December 31, 2021
			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
U.S. Government agency		44	$	62,530	$	(1,407	)	$	32,968	$	(1,028	)	$	95,498	$	(2,435	)
State and municipal		103		55,982		(953	)		3,742		(100	)		59,724		(1,053	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		72		253,141		(2,915	)		7,370		(243	)		260,511		(3,158	)
Collateralized mortgage obligations (CMOs)		46		92,217		(1,648	)		—		—			92,217		(1,648	)
Corporate debt		1		—		—			75		(8	)		75		(8	)
Total		266	$	463,870	$	(6,923	)	$	44,155	$	(1,379	)	$	508,025	$	(8,302	)

Management evaluates debt securities, which are comprised of U.S. Government Agencies, state and municipalities, mortgage-backed securities, CMOs and other issuers, for OTTI and considers the current economic conditions, the length of time and the extent to which the fair value has been less than cost, interest rates and the bond rating of each security. The unrealized losses at December 31, 2022 in U.S. Government securities, state and municipal securities, mortgage-backed securities, CMOs and corporate debt securities are primarily the result of interest rate fluctuations. If held to maturity, these bonds will mature at par, and QNB will not realize a loss. QNB has the intent to hold the securities and does not believe it will be required to sell the securities before recovery occurs.

QNB holds one trust preferred security, PreTSL IV which is classified as available-for-sale and carried at fair value. This security has been in an unrealized loss position for more than twelve months.

The following table provides additional information related to PreTSL IV as of December 31, 2022:

Deal

Class

Book

value

Fair

value

Unrealized

gains (losses)

Realized

OTTI

credit

loss

(YTD 2022)

Total

recognized

OTTI

credit

loss

Moody's

ratings

Current

number of

performing

banks

Current

number of

performing

insurance

companies

Actual

deferrals

and defaults

as a % of

total

collateral

Total

performing collateral

as a % of

outstanding

bonds

PreTSL IV

Mezzanine

)

—

Ba1

0.0

291.5

Mezzanine* - class of bonds still outstanding, represents the senior-most obligation of the trust)

The Company’s equity securities consist of investments with readily determinable fair values in large cap stock companies. Changes in the fair value of these equity securities are recorded to earnings in non-interest income, in accordance with ASU 2016-01 Financial Instruments – Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities.

At December 31, 2022 and 2021, the Company had $12,056,000 and $12,410,000, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during 2022, 2021 and 2020:

Tax benefit applicable to the net realized losses for the year ended December 31, 2022 was $296,000. Tax expense applicable to the net realized gains for the years ended December 31 2021 and 2020 were, $784,000, and $155,000, respectively. Proceeds from sales of investment equity securities were $1,594,000, $7,768,000 and $4,767,000 for the years ended December 31, 2022, 2021 and 2020, respectively.