SECURITIES

12 Months Ended

Dec. 31, 2024

SECURITIES

SECURITIES

NOTE B – SECURITIES:

Effective January 1, 2023, in conjunction with the adoption of CECL, and again at December 31, 2023 and December 31, 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.  An increase of the impairment of $9,980 was recorded for a total ACL of $40,000 as of December 31, 2024.

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

			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
December 31, 2024	Cost		Gains		Losses		Fair Value
Available for sale securities:
U.S. Treasuries	$	124,320	$	150	$	(7,425)	$	117,045
Mortgage-backed securities		46,845		35		(4,368)		42,512
Collateralized mortgage obligations		73,857		77		(5,070)		68,864
States and political subdivisions		100,845		—		(20,618)		80,227
Total available for sale securities	$	345,867	$	262	$	(37,481)	$	308,648

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

			Gross		Gross				Allowance		Net
	Amortized		Unrealized		Unrealized		Estimated		for Credit		Carrying
December 31, 2024	Cost		Gains		Losses		Fair Value		Losses		Amount
Held to maturity securities:
U.S. Treasuries	$	39,978	$	20	$	(450)	$	39,548	$	—	$	39,978
States and political subdivisions		83,218		14		(11,668)		71,564		(40)		83,178
Total held to maturity securities	$	123,196	$	34	$	(12,118)	$	111,112	$	(40)	$	123,156

			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

			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. 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, or 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 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 the end of the year an analysis was performed, and management determined an increase of the provision for credit losses on held to maturity securities was appropriate as of December 31, 2024.

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

	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
Balance, December 31, 2023	$	30
Provision for credit losses		10
Charge-offs of securities		—
Recoveries		—
Balance, December 31, 2024	$	40

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 December 31, 2024 and December 31, 2023, aggregated by credit quality indicators (in thousands):

	December 31, 2024		December 31, 2023
Aaa	$	39,978	$	59,901
Aa1/Aa2/Aa3		33,961		38,496
A1/A2		3,164		3,195
Baa1/Baa2		1,000		1,003
Not rated		45,093		48,346
Total	$	123,196	$	150,941

At December 31, 2024, 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 year ended December 31, 2024.

The amortized cost and fair value of debt securities at December 31, 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	$	25,052	$	25,018
Due after one year through five years		106,901		98,931
Due after five years through ten years		50,841		41,679
Due after ten years		42,371		31,644
Mortgage-backed securities		46,845		42,512
Collaterized mortgage obligations		73,857		68,864
Total	$	345,867	$	308,648
Held to maturity securities:
Due in one year or less	$	28,445	$	28,318
Due after one year through five years		45,659		43,115
Due after five years through ten years		30,691		26,291
Due after ten years		18,401		13,388
Total	$	123,196	$	111,112

The Company evaluates securities available for sale for impairment when there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Due to the zero credit loss assumption and the considerations applied to the securities available for sale, no allowance for credit losses was recorded on January 1, 2023, and there was no allowance for credit losses for securities available for sale as of December 31, 2023 or December 31, 2024. Also, as part of the Company’s evaluation of its intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, the Company considers its investment strategy, cash flow needs, liquidity position, capital adequacy, and interest rate risk position. Management does not intend to sell these securities prior to recovery, and it is more likely than not that the Company will have the ability to hold them, primarily due to adequate liquidity, until each security has recovered its cost basis.

Available for sale securities with gross unrealized losses at December 31, 2024, 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
December 31, 2024:
U.S. Treasuries	$	—	$	—	$	81,991	$	7,425	$	81,991	$	7,425
Mortgage-backed securities		3,993		20		36,388		4,348		40,381		4,368
Collateralized mortgage obligations		1,728		9		51,513		5,061		53,241		5,070
States and political subdivisions		—		—		80,087		20,618		80,087		20,618
Total	$	5,721	$	29	$	249,979	$	37,452	$	255,700	$	37,481

Available for sale securities with gross unrealized losses at 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
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 December 31, 2024, 9 of the 16 Treasuries, 41 of the 46 mortgage-backed securities, 23 of the 30 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 during 2024, 2023 or 2022.

Securities with a fair value of $311,774,135 and $296,945,649 at December 31, 2024 and 2023, respectively, were pledged to secure public deposits, federal funds purchased and other balances required by law.