Investments

9 Months Ended

Sep. 30, 2024

Investments

Investments

4. Investments:

Effective January 1, 2023, in conjunction with the adoption of CECL, and again at December 31, 2023 and September 30, 2024, the Company evaluated credit impairment for individual securities available for sale whose fair value was below amortized cost with a more than inconsequential risk of default and where the Company had assessed the decline in fair value significant enough to suggest a credit event occurred. There were no securities that met the criteria of a credit loss event and therefore, no allowance for credit loss was recorded for either period. The Company also evaluated impairment for individual securities held to maturity and determined an allowance for credit loss of $41,000 should be established as of January 1, 2023. A reversal of a portion of the impairment of $(11,346) was recorded as of December 31, 2023. No additional impairment was recorded as of September 30, 2024.

The amortized cost, fair value and allowance for credit losses related to securities at September 30, 2024 and December 31, 2023, are as follows (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
September 30, 2024	Cost		Gains		Losses		Fair Value
Available for sale securities:
U.S. Treasuries	$	139,174		464	$	(5,846)	$	133,792
Mortgage-backed securities		47,970		46		(3,389)		44,627
Collateralized mortgage obligations		83,142		62		(4,429)		78,775
States and political subdivisions		100,950		—		(16,266)		84,684
Total available for sale securities	$	371,236	$	572	$	(29,930)	$	341,878

			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
December 31, 2023	Cost		Gains		Losses		Fair Value
Available for sale securities:
U.S. Treasuries	$	123,945	$	55	$	(8,542)	$	115,458
Mortgage-backed securities		52,374		14		(4,603)		47,785
Collateralized mortgage obligations		101,316		17		(6,327)		95,006
States and political subdivisions		101,560		—		(20,332)		81,228
Total available for sale securities	$	379,195	$	86	$	(39,804)	$	339,477

There was no allowance for credit losses on available-for-sale securities as of September 30, 2024 or December 31, 2023.

			Gross		Gross				Allowance		Net
	Amortized		Unrealized		Unrealized		Estimated		for Credit		Carrying
September 30, 2024	Cost		Gains		Losses		Fair Value		Losses		Amount
Held to maturity securities:
U.S. Treasuries	$	44,971	$	74	$	(315)	$	44,730	$	—	$	44,971
States and political subdivisions		88,694		16		(10,026)		78,684		(30)		88,664
Total held to maturity securities	$	133,665	$	90	$	(10,341)	$	123,414	$	(30)	$	133,635

			Gross		Gross				Allowance		Net
	Amortized		Unrealized		Unrealized		Estimated		for Credit		Carrying
December 31, 2023	Cost		Gains		Losses		Fair Value		Losses		Amount
Held to maturity securities:
U.S. Treasuries	$	59,901	$	41	$	(907)	$	59,035	$	—	$	59,901
States and political subdivisions		91,040		23		(11,575)		79,488		(30)		91,010
Total held to maturity securities	$	150,941	$	64	$	(12,482)	$	138,523	$	(30)	$	150,911

Management analyzed financial data on the state and political subdivision held-to-maturity securities. For the securities that do not have ratings, management assigned a rating based on ratings for similar municipalities. This evaluation is done for securities whose fair value is below amortized cost with a more than inconsequential risk of default and where the Company has assessed the decline in fair value is significant enough to suggest a credit event occurred. Credit events are generally assessed based on adverse conditions specifically related to the security, an industry, geographic area, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, changes in the financial condition of the underlying loan obligors. Management utilized a model provided by a third-party vendor to calculate the potential reserve required on the specific securities. The approach utilizes many inputs including enhanced and underlying ratings, maturity, issuer type/subtype, NAICS code, origination date, refunding status as well as state and region. At adoption of CECL, management determined there was a reserve required for the allowance for credit losses on held-to-maturity securities. At the end of the year an updated analysis was performed, and management determined a reduction of the provision for credit losses on held to maturity securities was appropriate as of December 31, 2023. No additional provision or reduction was required as of September 30, 2024.

The following table shows a rollforward of the allowance for credit losses on held-to-maturity securities for the nine months ended September 30, 2024 and the year ended December 31, 2023 (in thousands):

	State and political
	subdivisions
Balance, December 31, 2023	$	30
Provision for credit losses		—
Charge-offs of securities		—
Recoveries		—
Balance, September 30, 2024	$	30

	State and political
	subdivisions
Balance, December 31, 2022	$	—
Adjustment for adoption of ASU 2016-13		41
Provision for credit losses		(11)
Charge-offs of securities		—
Recoveries		—
Balance, December 31, 2023	$	30

The Company monitors the credit quality of the debt securities held-to-maturity through the use of credit ratings. The Company monitors the credit ratings on a quarterly basis. The following table summarizes the amortized cost of debt securities held-to-maturity at September 30, 2024 and December 31, 2023, aggregated by credit quality indicators (in thousands):

	September 30, 2024
Aaa	$	44,971
Aa1/Aa2/Aa3		38,183
A1/A2		3,171
Baa1/Baa2		1,000
Not rated		46,340
Total	$	133,665

	December 31, 2023
Aaa	$	59,901
Aa1/Aa2/Aa3		38,496
A1/A2		3,195
Baa1/Baa2		1,003
Not rated		48,346
Total	$	150,941

At September 30, 2024 and December 31, 2023, the Company had no securities held-to-maturity that were past due 30 days or more as to principal or interest payments. The Company had no securities held-to-maturity classified as nonaccrual for the nine months ended September 30, 2024 and the year ended December 31, 2023.

The amortized cost and fair value of debt securities at September 30, 2024, (in thousands) by contractual maturity, are shown below. 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.

	Amortized Cost		Fair Value
Available for sale securities:
Due in one year or less	$	39,954	$	39,892
Due after one year through five years		106,869		100,991
Due after five years through ten years		49,508		42,658
Due after ten years		43,793		34,935
Mortgage-backed securities		47,970		44,627
Collaterized mortgage obligations		83,142		78,775
Total	$	371,236	$	341,878
Held to maturity securities:
Due in one year or less	$	34,561	$	34,401
Due after one year through five years		39,631		38,256
Due after five years through ten years		37,618		33,876
Due after ten years		21,855		16,881
Total	$	133,665	$	123,414

Available for sale securities with gross unrealized losses at September 30, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows (in thousands):

	Less Than Twelve Months				Over Twelve Months				Total
			Gross				Gross				Gross
			Unrealized				Unrealized				Unrealized
Available for Sale	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
September 30, 2024:
U.S. Treasuries	$	14,972	$	9	$	83,519		5,837		98,491	$	5,846
Mortgage-backed securities		672		—		38,214		3,389		38,886		3,389
Collateralized mortgage obligations		6,468		18		63,497		4,411		69,965		4,429
States and political subdivisions		—		—		84,544		16,266		84,544		16,266
Total	$	22,112	$	27	$	269,774	$	29,903	$	291,886	$	29,930

	Less Than Twelve Months				Over Twelve Months				Total
			Gross				Gross				Gross
			Unrealized				Unrealized				Unrealized
Available for Sale	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
December 31, 2023:
U.S. Treasuries	$	24,750	$	22	$	85,660	$	8,520		110,410	$	8,542
Mortgage-backed securities		2,811		20		38,521		4,583		41,332		4,603
Collateralized mortgage obligations		—		—		90,290		6,327		90,290		6,327
States and political subdivisions		—		—		81,088		20,332		81,088		20,332
Total	$	27,561	$	42	$	295,559	$	39,762	$	323,120	$	39,804

At September 30, 2024, 12 of the 19 Treasuries, 39 of the 46 mortgage-backed securities, 30 of the 33 collateralized mortgage obligations and 74 of the 75 securities issued by states and political subdivisions contained unrealized losses.

There were no sales of available for sale debt securities for the nine months ended September 30, 2024 and September 30, 2023.

Securities with a fair value of $328,161,363 and $296,945,649 at September 30, 2024 and December 31, 2023, respectively, were pledged to secure public deposits, federal funds purchased and other balances required by law.